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Interest rate in US (Rh) 7% Interest rate in Canada (Rh): 5% Line of credit in...

Interest rate in US (Rh) 7%
Interest rate in Canada (Rh): 5%
Line of credit in US USD 10,000,000
Line of credit in Canada CAD 12,500,000
The spot rate for CAD (S0): $0.80
1-year forward rate for CAD (FR): $0.82

Based on your recommended investment strategy your covered interest arbitrage profit should be:

Answer= USD 62,500

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