IVE 1F3004 Final end of study period case study a Insert Draw Design Layout References Tell me Share Com Cabrio 11 A A A A IUXX A. 2A Tango Styles Date 1. The consider the sout by wing into the cate Mary AR12,000,000. The horrow the funds in US cafe rate from a bank in the USA and convertino 2A forvet. For Das war month antecy wap transaction will be required. wants to be provided with nywa pol hod the wap erophically for the cross wiwa. Malevant information, that you will provided below PA Eug LAS Set 14 AH DON 0.000 DOR 2014 OG 10 07223 0722 0.000 ON DDIN DAN ON DON EN 100 C ill > 2 3 % 50 1 1 2 4 E 6 W E 4 R T us Cor! vo lo S >> D F G S AB 1F3004 Final end of study period case study. References Tell me Share OC mert Draw Design Layout Cab (11 AA BTX A2A Style 1 UK 05223 0.62 5.0458 0.100 BANK QUARENCY SWAPINTEREST RATE QUOTES AANITUS LIBORATE Woe CAD AUS PAR Years 100001141.370 676 0672 50505 2014052501451.144 1.14405720200455 0601.13 Below 0.54517000060012.00 STOPUSO LOST 29 2030 WODY WELCOME 55500 WEST STOSOWEGO P0718 London 04105 LIS WEST SISTERETSO BUZ SESTO OD OSTRELLIDO DE LOS 10 mm 514 hormation ODOS 000000 DODOM OSC ol 7 % S 1 2 # 3 $ 4 % 5 w on O 0 L 9 W. E R T 2 us Cot p. S >> A ci DS F G Z Y c. 2 F3004 Final end of stud... - Saved to my Mac Q References > Tell me Share Com sert Draw Design Layout A- Cabrio 11 - A A As BIUXX A2-A . Para Sey Dictate 10 15 Gustom The code restrica by to and time 120.000.000 The CEO the armban is the form for wapi wewe provided the force Wow Who man LAR Solar BUSA Valst be Ima Mart Bewe Se the pere Federe Mahap burk Mampare vereiro Mestrenant Compete with me rate on the watch M li word 1 ) 0 H + 99 w 3. 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 MidTech should borrow the funds in US$ at a fixed rate from a bank in the U.S.A. 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. Relevant information, that you will require are provided below: Page 2 of 4 Exchange rates: $/JPY $/Won $/CAD $/GBP $/AU$ S/ZAR Spot Bid Ask 0.0094 0.0095 0.0006 0.0008 0.7614 0.7616 1.3034 1.3038 0.7225 0.7226 0.0606 0.0607 Current borrowing interest rates on loans: USA Japan South Korea Canada UK Australia South Africa Fixed 0.640% 0.525% 1.164% 0.666% 0.577% 0.612% 5.045% Libor 0.130% 0.015% 0.654% 0.156% 0.067% 0.102% 4.535% BANK CURRENCY SWAP INTEREST RATE QUOTES AGAINST U.S. LIBOR RATE Yen Won CADS GBP AUS ZAR Years Bid% Ask% Bid% Ask% Bid% Ask% Bid% Ask% Bid% Ask% Bid% Ask% Bid% Ask% 1 0.6300.650 0.515 0.535 1.154 1.174 0.656 0.676 0.567 0.587 0.602 0.6225.035 5.055 20.640 0.660 0.525 0.545 1.164 1.184 0.666 0.686 0.577 0.597 0.612 0.632 5.045 5.065 30.650 0.670 0.535 0.555 1.174 1.1940.676 0.696 0.587 0.607 0.622 0.642 5.055 5.075 40.660 0.680 0.545 0.565 1.184 1.204 0.686 0.706 0.597 0.617 0.632 0.6525.065 5.085 5 0.670 0.690 0.555 0.575 1.194 1.214 0.696 0.716 0.607 0.627 0.642 0.662 5.075 5.095 60.680 0.7000.565 0.585 1.204 1.224 0.706 0.726 0.617 0.637 0.652 0.672 5.085 5.105 70.690 0.710 0.575 0.595 | 1.214 1.234 0.716 0.736 0.627 0.647 0.662 0.6825.095 5.115 80.7000.720 0.585 0.605 | 1.224 1.244 0.726 0.746 0.637 0.657 0.672 0.692 5.105 5.125 9 0.710 0.730 0.595 0.615 1.234 1.254 0.736 0.756 0.647 0.667 0.682 0.702 5.115 5.135 100.720 0.740 0.605 0.625 1.244 1.264 0.746 0.766 0.657 0.677 0.692 0.712 5.125 5.145 Other summarised information: United Kingdom subsidiary profits generated quarterly: Estimated 30% share profit in South African plant per month: Capital cost of new electric tool plant in South Africa: 500,000 R2,000,000 R150,000,000 Page 3 of 4 R120,000,000 Capital cost of expanding existing plant in South Africa to electronic component manufacturing and electric tool manufacturing: Question 3: (16 marks) The CEO considers the investment in South Africa by entering into an agreement with Eleste Co to expand the existing plant by investing ZAR120,000,000. The CEO believes Midtesh should borrow the funds in US$ at a fixed rate from a bank in the U.S.A. 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: Marks Show the figures that should be applied in this column 1 mark 1 mark 1 mark 1 mark Marks ZAR to be invested: Spot exchange rate to purchase ZAR for investment: Borrowing rate in U.S.A. to be used: Value in US$ to be borrowed: Swap transaction: In which currency is the swap payment? e.. In US$ or ZAR MidTesh pays swap bank Midtesh pays swap bank Midtesh receives from swap bank MidTech receives from swap bank State whether the payment is Fixed or Libor State the percentage (%) of the payment 1 mark 1 mark 1 mark 1 mark Complete the diagram below to show the swap transaction graphically by inserting the correct interest rate or currency values in all the arrows below: 8 marks (1 mark for each correct insertion in arrows) Midtech Swap Bank US Bank it? FOREX Market Dacte IVE 1F3004 Final end of study period case study a Insert Draw Design Layout References Tell me Share Com Cabrio 11 A A A A IUXX A. 2A Tango Styles Date 1. The consider the sout by wing into the cate Mary AR12,000,000. The horrow the funds in US cafe rate from a bank in the USA and convertino 2A forvet. For Das war month antecy wap transaction will be required. wants to be provided with nywa pol hod the wap erophically for the cross wiwa. Malevant information, that you will provided below PA Eug LAS Set 14 AH DON 0.000 DOR 2014 OG 10 07223 0722 0.000 ON DDIN DAN ON DON EN 100 C ill > 2 3 % 50 1 1 2 4 E 6 W E 4 R T us Cor! vo lo S >> D F G S AB 1F3004 Final end of study period case study. References Tell me Share OC mert Draw Design Layout Cab (11 AA BTX A2A Style 1 UK 05223 0.62 5.0458 0.100 BANK QUARENCY SWAPINTEREST RATE QUOTES AANITUS LIBORATE Woe CAD AUS PAR Years 100001141.370 676 0672 50505 2014052501451.144 1.14405720200455 0601.13 Below 0.54517000060012.00 STOPUSO LOST 29 2030 WODY WELCOME 55500 WEST STOSOWEGO P0718 London 04105 LIS WEST SISTERETSO BUZ SESTO OD OSTRELLIDO DE LOS 10 mm 514 hormation ODOS 000000 DODOM OSC ol 7 % S 1 2 # 3 $ 4 % 5 w on O 0 L 9 W. E R T 2 us Cot p. S >> A ci DS F G Z Y c. 2 F3004 Final end of stud... - Saved to my Mac Q References > Tell me Share Com sert Draw Design Layout A- Cabrio 11 - A A As BIUXX A2-A . Para Sey Dictate 10 15 Gustom The code restrica by to and time 120.000.000 The CEO the armban is the form for wapi wewe provided the force Wow Who man LAR Solar BUSA Valst be Ima Mart Bewe Se the pere Federe Mahap burk Mampare vereiro Mestrenant Compete with me rate on the watch M li word 1 ) 0 H + 99 w 3. 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 MidTech should borrow the funds in US$ at a fixed rate from a bank in the U.S.A. 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. Relevant information, that you will require are provided below: Page 2 of 4 Exchange rates: $/JPY $/Won $/CAD $/GBP $/AU$ S/ZAR Spot Bid Ask 0.0094 0.0095 0.0006 0.0008 0.7614 0.7616 1.3034 1.3038 0.7225 0.7226 0.0606 0.0607 Current borrowing interest rates on loans: USA Japan South Korea Canada UK Australia South Africa Fixed 0.640% 0.525% 1.164% 0.666% 0.577% 0.612% 5.045% Libor 0.130% 0.015% 0.654% 0.156% 0.067% 0.102% 4.535% BANK CURRENCY SWAP INTEREST RATE QUOTES AGAINST U.S. LIBOR RATE Yen Won CADS GBP AUS ZAR Years Bid% Ask% Bid% Ask% Bid% Ask% Bid% Ask% Bid% Ask% Bid% Ask% Bid% Ask% 1 0.6300.650 0.515 0.535 1.154 1.174 0.656 0.676 0.567 0.587 0.602 0.6225.035 5.055 20.640 0.660 0.525 0.545 1.164 1.184 0.666 0.686 0.577 0.597 0.612 0.632 5.045 5.065 30.650 0.670 0.535 0.555 1.174 1.1940.676 0.696 0.587 0.607 0.622 0.642 5.055 5.075 40.660 0.680 0.545 0.565 1.184 1.204 0.686 0.706 0.597 0.617 0.632 0.6525.065 5.085 5 0.670 0.690 0.555 0.575 1.194 1.214 0.696 0.716 0.607 0.627 0.642 0.662 5.075 5.095 60.680 0.7000.565 0.585 1.204 1.224 0.706 0.726 0.617 0.637 0.652 0.672 5.085 5.105 70.690 0.710 0.575 0.595 | 1.214 1.234 0.716 0.736 0.627 0.647 0.662 0.6825.095 5.115 80.7000.720 0.585 0.605 | 1.224 1.244 0.726 0.746 0.637 0.657 0.672 0.692 5.105 5.125 9 0.710 0.730 0.595 0.615 1.234 1.254 0.736 0.756 0.647 0.667 0.682 0.702 5.115 5.135 100.720 0.740 0.605 0.625 1.244 1.264 0.746 0.766 0.657 0.677 0.692 0.712 5.125 5.145 Other summarised information: United Kingdom subsidiary profits generated quarterly: Estimated 30% share profit in South African plant per month: Capital cost of new electric tool plant in South Africa: 500,000 R2,000,000 R150,000,000 Page 3 of 4 R120,000,000 Capital cost of expanding existing plant in South Africa to electronic component manufacturing and electric tool manufacturing: Question 3: (16 marks) The CEO considers the investment in South Africa by entering into an agreement with Eleste Co to expand the existing plant by investing ZAR120,000,000. The CEO believes Midtesh should borrow the funds in US$ at a fixed rate from a bank in the U.S.A. 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: Marks Show the figures that should be applied in this column 1 mark 1 mark 1 mark 1 mark Marks ZAR to be invested: Spot exchange rate to purchase ZAR for investment: Borrowing rate in U.S.A. to be used: Value in US$ to be borrowed: Swap transaction: In which currency is the swap payment? e.. In US$ or ZAR MidTesh pays swap bank Midtesh pays swap bank Midtesh receives from swap bank MidTech receives from swap bank State whether the payment is Fixed or Libor State the percentage (%) of the payment 1 mark 1 mark 1 mark 1 mark Complete the diagram below to show the swap transaction graphically by inserting the correct interest rate or currency values in all the arrows below: 8 marks (1 mark for each correct insertion in arrows) Midtech Swap Bank US Bank it? FOREX Market Dacte