An FI Has a 1-Year 8-Percent US$160 Million Loan Financed

Multiple Choice

An FI has a 1-year 8-percent US$160 million loan financed with a 1-year 7-percent UK£100 million CD. The current exchange rate is $1.60/£. If at the end of the year, the exchange rate is $1.65/£, what is the spread earned on the loan by the FI in dollars after adjusting fully for exchange rates?

A) -$3,750,000.
B) -$1,250,000.
C) +$1,250,000.
D) +$3,750,000.
E) +$5,000,000.