The company Ford will start a currency swap with the Brazilian company Skol. The first payments will
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Question:
The company Ford will start a currency swap with the Brazilian company Skol.
The first payments will start in 3/1/2020 and will continue each year until 3/1/24.
The principals in the two currencies are $60 million and 300 million Real.
The interest rates are:
In Brazil: 3/1/2021 r = 0.5%
3/1/2022 r = 7.2335%
3/1/2023 r = 14.739845%
3/1/2024 r = 23.1158537%
In the United States: 3/1/2021 r = 0.41%
3/1/2022 r = 5.53091%
3/1/2023 r = 11.0185173%
3/1/2024 r = 17.6796284%
Ford will receive 3% per annum (continuously compounded
The exchange rate is 4.99 BRL/USD
What is the value of the swap? please show answers in excel spreadsheet if possible
Expert Answer:
To calculate the value of the swap we need to determine the present value of th... View the full answer
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