The CEO considers the investment in South Africa by entering into an agreement with Electo Co...

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The CEO considers the investment in South Africa by entering into an agreement with Electo Co to expand the existing plant by investing ZAR120,000,000. The CEO believes HighTech should borrow the funds in US$ at a fixed rate from a bank in the USA and convert it into ZAR for investment. For this purpose a 5 year (60 month) currency swap transaction will be required. He wants to be provided with a 5 year currency swap proposal. Also depict the swap graphically for the CEO to see how the swap will work. Workings: ZAR to be invested: Spot exchange rate to purchase ZAR for investment Borrowing rate in USA to be used: Value in US$ to be borrowed: Show the figures that should be applied in this column Swap transaction: In which currency is the swap payment? State whether the payment is fixed or e.g. in $ or ZAR Libor HighTech pays swap bank HighTech pays swap bank HighTech receives from swap bank Marks 1 mark 1 mark 1 mark 1 mark State the percentage (%) of the payment HighTech receives from swap bank Complete the diagram below to show the swap transaction graphically by inserting the correct interest rate or currency values in all the arrows below: 4 marks (0.5 mark for each correct insertion in arrows) US Bank HighTech Swap Bank Marks 3 marks 3 marks 3 marks 3 marks The CEO considers the investment in South Africa by entering into an agreement with Electo Co to expand the existing plant by investing ZAR120,000,000. The CEO believes HighTech should borrow the funds in US$ at a fixed rate from a bank in the USA and convert it into ZAR for investment. For this purpose a 5 year (60 month) currency swap transaction will be required. He wants to be provided with a 5 year currency swap proposal. Also depict the swap graphically for the CEO to see how the swap will work. Workings: ZAR to be invested: Spot exchange rate to purchase ZAR for investment Borrowing rate in USA to be used: Value in US$ to be borrowed: Show the figures that should be applied in this column Swap transaction: In which currency is the swap payment? State whether the payment is fixed or e.g. in $ or ZAR Libor HighTech pays swap bank HighTech pays swap bank HighTech receives from swap bank Marks 1 mark 1 mark 1 mark 1 mark State the percentage (%) of the payment HighTech receives from swap bank Complete the diagram below to show the swap transaction graphically by inserting the correct interest rate or currency values in all the arrows below: 4 marks (0.5 mark for each correct insertion in arrows) US Bank HighTech Swap Bank Marks 3 marks 3 marks 3 marks 3 marks