Kyocera is a Japanese MNE that operates in at least 12 countrics around the world but has little name recognition outside Japan. It has traditionally raised all capital in its home market and therefore has substantial quantitics of long-term yen-denominated debt.

As a result of its global expansion, the firm now faces substantial long foreign currency positions, particularly in U.S. dollars. It has decided that it wishes to manage this long dollar position by entering into a cross-currency interest rate swap to pay dollars and receive yen. Usc the data presented in Exhibit 9.8 to answer the following questions:

a. What would be the annual swap payments on a \(Y 500\) million notional principal, four-year maturity currency swap, in both yen (receive yen) and U.S. dollars (pay dollars)?

b. Calculate the annual cash flows associated with the currency swap in part

(a) for the entire lifespan of the swap agreement, including both principal and interest. Use the structure of Exhibit 9.9 as a template. Assume a spot exchange rate of \(Y 114.80 / \mathrm{S}\).

c. Assume that the day following the swap agrecment in part (a), Kyocera changes its mind and wishes to unwind the currency swap. If all interest rares are the same, but the exchange rate has changed from \(114.80 / \$\) to \(7112.00 / \$\), what is the cost or profit of unwinding the swap?