Suppose a US investor has $7000 to invest and can choose either a US investment paying 3% or a foreign investment paying 1%, where e is currently 77 and the investor can lock in e in one year equal to 75. Could you please explain how to get these answers in () I know they are correct according to our Prof but I do not know how to get there.

a)How much foreign currency can investor get now? (the answer is 539000.0)

b)How much foreign currency will investor get after a year? (answer is 544390.0)

c)How much (in dollars) will the foreign investment be worth after a year?(answer is 7258.53)

d)

Would investor prefer to invest

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a

Domestic

b

Foreign