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1. Aron Company enters into a 2-year US$ / Euro swap with Brun Inc. on a notional principal amount of Euros 10 million (US$11 million

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1. Aron Company enters into a 2-year US$ / Euro swap with Brun Inc. on a notional principal amount of Euros 10 million (US$11 million at current spot rate). Aron agrees to pay Brun 5% semi-annually in Euros. Brun Inc agrees to pay US$ LIBOR6 +50 bps semi-annual rate. Based on the following market data, calculate the net Euro payment from Aron Co. (10 marks) LIBOR U SS / Euro spot Net s receipt/ (payment) IT + 6mos T + 12 mos T + 18 mos T + 24 mos 4.75% 4.95% 5.00% 4.90% 1.1000 1.1050 1.1500 1.1800 1.1600

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