1. Assume the following information:

U.S. deposit rate for 1 year = 6%

U.S. borrowing rate for 1 year = 8%

New Zealand deposit rate for 1 year = 5%

New Zealand borrowing rate for 1 year = 7%

New Zealand dollar forward rate for 1 year = $.45/NZ$

New Zealand dollar spot rate = $.40/NZ$

Also assume that a U.S. exporter denominates its New Zealand exports in NZ$ and expects to receive NZ$500,000 in 1 year. You are a consultant for this firm.

Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a money market hedge?