Problem
The SHP CEO has established his office in New York and acquired a Jaguar for £35,000 using a three-month payment plan. He possesses adequate funds in his New York City bank account, where the monthly interest rate is 0.35% compounded monthly, to cover the car's cost. Presently, the spot exchange rate stands at $1.45/£, while the three-month forward exchange rate is $1.40/£. In London, the money market interest rate for a three-month investment is 2.0%. The two payment options are available for buying the Jaguar,
i. Purchase a £35,000 forward with the funds kept in the US bank.
ii. Purchase a certain number of pounds at the current spot rate and invest the amount in the UK for three months until its maturity value reaches £35,000.
You are required to evaluate each payment method and suggest your preferred method with workings.