MBA 642: Yen Carry Trade

You borrow 1000 yen at 1%. You redeploy the yen into dollars to purchase TSY securities that are yielding 5%. At the time the trade is instituted, $1 = ¥118. One month later $1 = ¥100. What are the financial ramifications of the trade? That is, provide me with the return on your investment. Email your results to me by Monday, April 2.