Party A is an American company that wants to build a plant in china for 42 million

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Party A is an American company that wants to build a plant in china for 42 million CNY and party B is a

Chinese company that wants to build a plant in the US for 6 million USD. Assume the rate is 7 CNY for 1

USD. Unlike party B, party A can borrow for 3% in the American Markets for 3 years. Similarly, unlike party A,

Party B can borrow for 4% in the Chinese Markets for 3 years. (assume these loans are bond issues)

Both parties agree to enter into a swap - how much should Party A pay or receive in order to enter into

the swap.

Posted Date: May 15, 2024 01:03 PM

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Party A is an American company that wants to build a plant in china for 42 million

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To solve this problem we need to calculate the present value of the cash flows for each party and th... View the full answer

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