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 the exchange rate remains the same, what is the dollar spread earned by the bank at the end of the year?

A) $750,000.
B) $1,000,000.
C) $1,250,000.
D) $1,600,000.
E) $1,750,000.