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Sun Bank USA has purchased a 16 million one-year Australian dollar loan that pays 13 percent interest annually. The spot rate of U.S. dollars for Australian dollars is $0.6250/A$1. It has funded this loan by accepting a British pound (BP)Ac€?odenominated deposit for the equivalent amount and maturity at an annual rate of 11 percent. The current spot rate of U.S. dollars for British pounds is $1.6000/A??L1.
What should the spot rate of U.S. dollars for BPs be at the end of the year in order for the bank to earn a net interest income of $210,000 (disregarding any change in principal values)? (Round your answer to 4 decimal places. (e.g., 32.1616)) |
Spot rate of U.S. dollars | $ |
Jun 22 2020 View more View Less
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