MSN Bank expects that the New Zealand dollar (NZD) will appreciate against the U.S. dollar (USD) from its spot rate of $.4525 to $.4725 in 190 days. The following interbank lending and borrowing rates exist:

Annual borrowing rate Annual lending rate

USD: 11.20% 10.50%

NZD: 10.00% 9.00%

MSN Bank considers borrowing 3 million (i.e., $3,000,000) U.S. dollars in the interbank market and investing the funds in NZD for 190 days. Estimate the profits (or losses) that could be earned from this strategy. Should MSN Bank pursue this strategy? Show necessary calculations and discuss (50 words excluding calculations). Also, Calculate the break-even spot at the end of the investment window.