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Question: An Australian exporter has a retail operation in the US and they want to swap the US dollars into Australian dollars. The exporter would like to swap USD1,000,000 over 3 years and agree to make annual interest payments at the fixed rate of 5.5%. They also agree to receive an equivalent Australian dollar amount over 3 years at the fixed annual interest payment of 4%. The spot exchange rate is AUD1.36/USD.

i. Calculate the US dollar cash flows and final payments

ii. Calculate the Australian dollar cash flows and the final receipts from this arrangement

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92779964

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