Zoustar Limited is an Australian company. Zoustar's CFO observes they can borrow in the US at 3% p.a. whereas to borrow locally would cost. They decide to borrow US$1 million for one year when the AUD/USD rate is 0.7250 and to hedge the FX risk with an FX swap. (a) How much USD is repayable in one year? (b) What rates will make-up the FX swap (assuming the FX dealer uses the above data to compute their forward rate)? (c) How much AUD will be required to repay the debt? (d) What is the effective borrowing costs? w Format Tools Table