13. Bombardier, the well-known Canadian company, is looking for 10 million to fi- nance capital expenditures in France to supply rolling stock to the Paris mtro Bombardier (FR) is the French arm of Bombardiers operations. At the current ex- change rate of $2.00/, Bombardier could issue S20 million in three-year bonds in Toronto at a fixed interest rate of 7 percent. Alternatively, Bombardier could issue 10 million in three-year bonds in Paris, also at a fixed interest rate of 7 percent. Meanwhile, Danone, a French multinational food-products corporation, needs S20 million for its investments in a Qubec cheese factory operated by Danone (Canada) Danone can issue 10 million in three-year bonds in Paris at a fixed rate of 6 percent or a S 20 million three-year bond issue (a Eurobond issue), also in Paris, at a fixed rate of 8 percent. Both Bombardier and Danone are clients of the Mid-Atlantic Swap Bank. Mid Atlantic quotes three-year dollar interest swaps at 7.00 - 7.15 and three-year euro () interest swaps at 6.00 - 6.10 against dollar LIBOR flat (a) Propose a foreign exchange swap that is beneficial to Bombardier, BP and Mid-Atlantic; b) Identify the rates of interest and currencv denomination of the flows to and from the swap bank. Ensure that there is something in it for the Mid-Atlantic Swap Bank