Hi can you please explain how to get this answer. Thank you. K-Roo Ltd.'s US competitor took out an AUD 27 million, 5-year loan to finance its expansions inAustralia.However, it prefers to make its debt payments in USD and therefore wants to swap into a fixed-rate USD loan.Westpac quotes the following annualized rates on 5-year currency swaps:USD: 7.61% bid and 7.88% offered against the 6-month dollar LIBORAUD: 4.14% bid and 4.49% offered against the 6-month dollar LIBORIf the current AUD/USD spot rate is 1.69, what are the semi-annual cash flows associated with thedebt payments of a AUD 27m swap?You want to swap out of a AUD 27 mil loan and into a fixed-rate USD loan, and you can ignore theoff-setting LIBOR payments.a. USD 0.629467 mil payment to Westpac; receive AUD 0.558900 mil payment fromWestpacb. receive USD 0.629467 mil payment from Westpac; AUD 0.558900 mil payment toWestpacc. USD 1.258935 mil payment to Westpac; receive AUD 1.117800 mil payment from Westpacd. receive USD 1.258935 mil payment from Westpac; AUD 1.117800 mil payment to Westpace. USD 0.607899 mil payment to Westpac; receive AUD 0.558900 mil payment fromWestpac

To obtain loan from Westpac for USD, ask rate will apply = 7.88% p.a and to receive payments from…

Answered: ISD loan. pac quote

Business

Accounting

ISD loan. pac quote

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 1ST

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Dune Ltd. is an Irish company which will pay CAN$609,000 to a supplier in Toronto in three months time. The spot rate of exchange today is CAN$1.45 = €1. In three-month forward contracts, the Canadian dollar is at a discount of CAN$0.05 against the €. Dune Ltd. has decided to hedge its foreign currency risk in relation to the CAN$609,000 payment using a three-month forward contract. How much will Dune Ltd. pay in € to purchase the CAN$609,000 under the forward contract? €406,000 €420,000 €435,000 None of the above
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