Can someone explain and answer this question in sir’s method?

The solution is option b- BRL1,344.
The equation below is often called the “covered interest arbitrage relationship” because if it is not satisfied, a risk-free arbitrage opportunity exists. It is based on the required equivalence of the two possible investment paths: if the two paths do not produce the same terminal result, an arbitrage profit exists.
(1+id)=Sf/d(1+if)(1Ff/d)
where,

Sf/d = Spot rate: number of units of foreign currency (price currency) per one unit of domestic currency

Ff/d = Forward rate: number of units of foreign currency (price currency) per one unit of domestic currency

id = Domestic interest rate

if = Foreign interest rate

The left-hand side is 1 plus the return that is earned domestically. The right-hand side represents 1 plus the return from converting to foreign currency at the spot rate, investing at the foreign rate, and converting back to domestic currency using the forward rate.

The arbitrage profit is the right side of the equation minus the left side.

Left Side of Equation: BRL500,000 × (1 + 0.041) = BRL520,500
Right Side of Equation:

Step Transaction Explanation
1 BRL500,000 × (1/2.1128AUD/BRL) = AUD236,653 Convert domestic to foreign
2 AUD236,653 × (1.031) = AUD243,989 Invest foreign at foreign rate
3 AUD243,989 × 2.1388 = BRL521,844 Convert foreign to domestic
Arbitrage profit = BRL521,844 – BRL520,500= BRL1,344

THIS IS WHAT IS GIVEN IN THE CANDIDATE RESOURCES SOLUTION.