BOA (US Bank) believes that New Zealand dollar will appreciate over the next 90 days from US $0.48/NZ$ to $0.50/NZ$. The following information is available.

Country

US

New Zealand

Interest Rate (annual )

7.20%

6.8%

BOA has the capacity to borrow $5 million from Chase Bank. If BOA forecasting is correct, what will be its US$ profit from this FX speculation over the 90 days period?

1. around $0.21 million
2. around $0.51 million
3. around $0.26 million
4. around $0.53 million