While you were visiting London, you purchased a Jaguar for $36,000,$ payable in three months. You have enough cash at your bank in

New York City, which pays $0\mathrm{.}35\%$ interest per month, compounding monthly, to pay for the car. Currently, the spot exchange rate is

$$1\mathrm{.}55$ per $$ and the three$-$month forward exchange rate is $$1\mathrm{.}50$ per $.$ In London, the money market interest rate is $2\mathrm{.}0\%$ for a three$-$

month investment. There are two alternative ways of paying for your Jaguar.

Required:

a$.$ If you keep the funds at your bank in the United States and buy a $36,000$ forward, what will be the dollar cost of the Jaguar you

purchased?

Note: Do not round intermediate calculations. Round off the final answer to nearest whole dollar.

b$.$ Alternatively, you can buy a certain pound amount spot today and invest the pound amount in the U$.$K$.$ for three months so that the

maturity value becomes equal to $36,000.$ What will the dollar cost of your Jaguar if you use this payment method?

Note: Do not round intermediate calculations. Round off the final answer to nearest whole dollar.

c$.$ Which method would you prefer?