Reference no: EM132862476

Question - Kurnick Co. expects that the pound will appreciate from $1.25 to $1.76 per pound in one. It has no money to invest, but it could borrow money to invest. It has been approved by a bank to borrow either 3 million dollars or 3 million pounds for one year. It can borrow dollars at annual rate of 5.9% or British pounds at 6.6%. It can invest in a risk-free dollar deposit at annual rate of 2.83% or a risk-free British deposit at 3.81%. Determine the expected profit (in dollars) if Kurnick Co. pursues a strategy to capitalize on the expected appreciation of the pound (round up to a dollar)? Please DONOT compute in the intermediate steps.