Suppose that the annual interest rate is 5.0% in the United States and 2.5% in France and that the spot exchange rate is $1.5/ and the forward exchange rate, with one-year maturity (i.e. 360 days), is $1.23/. Assume that arbitrage can borrow up to $1,000,000 or 892,857.14 (which is equivalent to $1,000,000 at the spot exchange rate of $1.12/). Calculate arbitrage profit from a German investor's point of view.

Is there an arbitrage opportunity? If yes, what is the profit?

Thank you!