DVR Inc. can borrow dollars for five years at a coupon rate of 2.84 percent. Alternatively,...

 

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DVR Inc. can borrow dollars for five years at a coupon rate of 2.84 percent. Alternatively, it can borrow yen for five years at a rate of .94 percent. The five-year yen swap rates are 0.73-0.70 percent and the dollar swap rates are 2.50-2.53 percent. The currency ¥/$ exchange rate is 87.620. Determine the dollar AIC and the dollar cash flow that DVR Inc. would have to pay under a currency swap where it borrows ¥1,750,000,000 and swaps the debt service into dollars. Borrow Swap DVR Inc. can borrow dollars for five years at a coupon rate of 2.84 percent. Alternatively, it can borrow yen for five years at a rate of .94 percent. The five-year yen swap rates are 0.73-0.70 percent and the dollar swap rates are 2.50-2.53 percent. The currency ¥/$ exchange rate is 87.620. Determine the dollar AIC and the dollar cash flow that DVR Inc. would have to pay under a currency swap where it borrows ¥1,750,000,000 and swaps the debt service into dollars. Borrow Swap

Answer rating: 100% (QA)

DVR Inc Currency Swap Analysis Based on the information provided we can calculate the Dollar Annual Interest Cost AIC and annual dollar cash flow for ... View the full answer