Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu at a price of

yen 280million. The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is

yen 98 equals $ 1 The current interest rate on one-year U.S. Treasury bills is 7%, and on one-year Japanese government bonds the interest rate is 5%.

a. If Halliburton exchanges dollars for yen today and invests the yen in Japan for one year, it will need $2,721,088 to exchange today in order to have yen 280

million in one year. (Round your response to the nearest dollar.)

b. If Halliburton enters a forward contract, agreeing to buy yen 280million in one year at an exchange rate of yen 96 equals $ 1 it will need what amount today if it plans to invest the dollars at the U.S. interest rate of 7%. (Round your response to the nearest dollar.)