Suppose that Denver Financial Co. expects the exchange rate of the New Zealand dollar (NZ$) to appreciate from its current level of 0.5 to 0.52 in 30 days. Denver Financial seeks to capitalize on this potential opportunity.

Suppose that Denver Financial begins by borrowing $35,000,000 and converting it to New Zealand dollars (NZ$).

The following table shows the short-term interest rates (annualized) in the interbank market.

CurrencyLending RateBorrowing rate(Adjusted for 30-day period)(Adjusted for 30-day period)U.S. Dollars6.72%7.20%New Zealand Dollars (NZ$)6.48%6.96%

Suppose that Denver Financial takes its NZ$70,000,000.00 and invests it. Denver Financial can earn a 0.0054 percent return after 30-days.

Hint: Assume 360 days in a year.

At the end of 30-days, Denver Financial will have a total of NZ (New Zealand dollars) from the investment.