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You expect that the Mexican peso will appreciate against the Australian dollar from its spot rate of A$0.2004 to A$0.2673 in one year. The following

You expect that the Mexican peso will appreciate against the Australian dollar from its spot rate of A$0.2004 to A$0.2673 in one year. The following interbank lending and borrowing rates exist:

Lending Rate Borrowing Rate
Australian dollar 7.86% 8.75%
Mexican peso 8.28% 9.45%

You have a borrowing capacity of either 1 million Australian dollars or 5 million Mexican pesos in the interbank market. Without using your own deposited fund, estimate the profits in percentage. (enter 2 decimal places number with no sign or symbol)

Please show detailed workings to get the answer. (Answer: 35.68)

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