1.. Exhibit 1 gives details for the two alternative debt issues. Exhibit 2 provides current information about spot currency exchange rates and the three-year tenor euro/U.S. dollar currency and interest rate swap.

b. Show the notional principal and interest payment cash flows of the combined interest rate and currency swap.
Note: Your response should show both the correct currency ($ or €) and amount for each cash flow.
Answer problem b in the template provided.
Template for problem b

c. State whether or not World would reduce its borrowing cost by issuing the debt denominated in U.S. dollars, accompanied by the combined interest rate and currency swap. Justify your response with one reason.

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EXHIBIT 1 World Telephone Debt Details Characteristic Par value Euro Currency Debt 3.33 billion U.S. Dollar Currency Debt $3 billion