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Finance - Exchange Rates and Interest rates

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9.[6] A Swiss bank converted 1.2 million Swiss francs to euros to make a euro loan to a customer when the exchange rate was 1.75 francs per euro. The borrower agreed to repay the principle plus 4% interest in 1 year. The borrower repaid euros at loan maturity and when the loan was repaid the exchange rate was 1.85 francs per EURO. What was the bank's franc rate of return?

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Solution Summary

A Swiss bank converted 1.2 million Swiss francs to euros to make a euro loan to a customer when the exchange rate was 1.75 francs per euro. The borrower agreed to repay the principle plus 4% interest in 1 year. The borrower repaid euros at loan maturity and when the loan was repaid the exchange rate was 1.85 francs per EURO. What was the bank's franc rate of return?

$2.19