2. USA-RebelCo needs 125 million Brazilian Real (BR) to set up a new subsidiary there. USA-RebelCo is relatively unknown outside the USA so borrowing Real directly in Brazil would be difficult at a good rate and need a long processing time. The current exchange rate is 5 BR / $. At the current exchange rate, the US$ value of the 125 mil. Brazilian Real is $25 million. USA-Rebel will issue in the U.S. $25 million of 4-year debt with semi-annual interest payments at a floating rate of LIBOR +1.5. 6-month LIBOR is presently 5.0%. USA-Rebel is worried that the LIBOR rate will rise soon and desires locking in a fixed rate in a currency swap. USA-Rebel contracts for a SWAP with Greedee Bank. In the Swap, Greedee will pay USA-Rebel straight LIBOR every 6 months in exchange for USA-Rebel paying fixed 7.0% annual rate semi-annually to Greedee 3pts ea. a - Enter answers below (show amount and currency, $ or BR, on each answer): a. At initial rates, each 6 months (= 5. Yr), USA-Rebelco pays its US fenders the amount a b. At to swap start, USA-Rebelco pays to GREEDEE the initial amount c. At current interest rates, every 6 months (180/360), USA-Rebelco pays GREEDEE d. At current interest rates, every 6 months. (180/360), GREEDEE pays to USA-Rebelcod e. USA-Rebelco each 6 months needs to come up with how much more $ besides Swap receipts to cover its US lenders' debt paymentse f. The LIBOR rate for the last 6 months of the Swap rose to 6.0%. The final total closing swap payment at end t4 from USA to GREEDEE IS & The LIBOR rate for the last 6 months of the Swap rose to 6.0%. The final total closing swap payment at end t=4 from Greedee to USA-Rebel is b C 8 2. USA-RebelCo needs 125 million Brazilian Real (BR) to set up a new subsidiary there. USA-RebelCo is relatively unknown outside the USA so borrowing Real directly in Brazil would be difficult at a good rate and need a long processing time. The current exchange rate is 5 BR / $. At the current exchange rate, the US$ value of the 125 mil. Brazilian Real is $25 million. USA-Rebel will issue in the U.S. $25 million of 4-year debt with semi-annual interest payments at a floating rate of LIBOR +1.5. 6-month LIBOR is presently 5.0%. USA-Rebel is worried that the LIBOR rate will rise soon and desires locking in a fixed rate in a currency swap. USA-Rebel contracts for a SWAP with Greedee Bank. In the Swap, Greedee will pay USA-Rebel straight LIBOR every 6 months in exchange for USA-Rebel paying fixed 7.0% annual rate semi-annually to Greedee 3pts ea. a - Enter answers below (show amount and currency, $ or BR, on each answer): a. At initial rates, each 6 months (= 5. Yr), USA-Rebelco pays its US fenders the amount a b. At to swap start, USA-Rebelco pays to GREEDEE the initial amount c. At current interest rates, every 6 months (180/360), USA-Rebelco pays GREEDEE d. At current interest rates, every 6 months. (180/360), GREEDEE pays to USA-Rebelcod e. USA-Rebelco each 6 months needs to come up with how much more $ besides Swap receipts to cover its US lenders' debt paymentse f. The LIBOR rate for the last 6 months of the Swap rose to 6.0%. The final total closing swap payment at end t4 from USA to GREEDEE IS & The LIBOR rate for the last 6 months of the Swap rose to 6.0%. The final total closing swap payment at end t=4 from Greedee to USA-Rebel is b C 8
