(a) BritCo Ltd will receive $600,000 in six months, and will want to receive sterling and pay dollars.
It can do this with a money market hedge by borrowing US dollars now. The interest rate for six months in dollars is 3.5% × 6/12 = 1.75%. It will need to borrow now:
$600,000 / 1.0175 = $589,680.59.
It can immediately exchange these dollars into sterling at the spot rate of 1.8800, to obtain:
$589,680.59 / 1.8800 = £313,659.89.
After six months, the dollar loan will be repayable with interest. The total repayment will be $600,000, and the payment can be made from the $600,000 received from the customer.

(b) BritCo Ltd can do anything with the sterling it receives now from the hedging transaction. If it chose to invest the cash for six months at 5% per year (2.5% for six months), the investment of £313,659.89 would increase to:
£313,659.89 × 1.025 = £321,501.39.
To avoid opportunities for arbitrage between the money markets and the forward FX markets, the six-month forward exchange rate would therefore need to be:
$600,000 / £321,501.39 = 1.8662.