Example 2

A

B

time 0:

lend US$ 100m (i=6%)

borrow £ 40m (i=10%)

1 year later:

A

B

$ 6m

£ 4m interest

T years later:

A

B

receive $ 106m

pay back £ 44m

2 years later:

A

B

$ 6m

£ 4m interest

.

.

.

.

.

.

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