Question: 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

DVR Inc. can borrow dollars for five years at a coupon rate

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

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