In the interest rate market, you are given annual interest rates of 4 percent in the United States and 7 percent in Japan. The interest rates are continuously compounded. An FI can borrow (by issuing CDs) or lend (by purchasing CDs) at these rates. In the foreign currency market, at time t=0 (Now), the spot rate is JPY 125 per one USD. And the one-year forward exchange rate is USD 0.0077 per one JPY.

Assuming that at time t=0 (now), an arbitrager can borrow or lend exactly JPY 125,000 in the Japanese Interest rate (bond) market. Construct an arbitrage strategy whereby the arbitrager will have zero net cash flow at time t=0 (Now), but will have some positive net cash flow in JPY at time one-year from now (t=12 months). What is the maximum amount of that positive net cash flow in JPY at time t=12 months (one year from now)? The abbreviation USD is for US Dollar, and JPY is for Japanese Yen.

(Give your answer in JPY. DO NOT GIVE YOUR ANSWER IN USD. You are calculating net cash flow at t=12 months (one-year))

(Hint: Your final answer is a four-digit number. That means, your final answer can be any number between JPY1,000.0000 and JPY9,999.9994)

(Round-off to at least 4 decimal places. For example, if your answer is JPY1234.567894, then type 1234.5679 as your answer.)