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Henry borrows 100,000 at an interest rate i=1.5%; converts it into Australian dollars(AU$) at the current spot rate S(/AU$)=80; deposits the funds in a Australian
Henry borrows 100,000 at an interest rate i=1.5%; converts it into Australian dollars(AU$) at the current spot rate S(/AU$)=80; deposits the funds in a Australian savings account for a year at interest rate iAU$=7.5%. At the end of year, Henry converts his revenue in back into funding currency at the spot rate S1(/AU$). If the spot rate is S1(/AU$)=75, Henrys net profit/loss is
a. - 13166.67
b. - 718.75
c. 13166.67
d. 718.75
e. 781.25
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