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Sun Bank USA has purchased a 16 million one-year Australian dollar loan that pays 15 percent interest annually. The spot rate of U.S. dollars for
Sun Bank USA has purchased a 16 million one-year Australian dollar loan that pays 15 percent interest annually. The spot rate of U.S. dollars for Australian dollars (AUD/USD) is $0.625/A$1. It has funded this loan by accepting a British pound (BP)denominated deposit for the equivalent amount and maturity at an annual rate of 13 percent. The current spot rate of U.S. dollars for British pounds (GBP/USD) is $1.60/1. a. What is the net interest income earned in dollars on this one-year transaction if the spot rate of U.S. dollars for Australian dollars and U.S. dollars for BPs at the end of the year are $0.588/A$1 and $1.450/1, respectively? (Negative amount should be indicated by a minus sign. Do
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