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3. The CBO considers the investment in South Africa by entering into an agreement with Electo Co. to expand the existing plant by investing ZAR120,000,000.
3. The CBO considers the investment in South Africa by entering into an agreement with Electo Co. to expand the existing plant by investing ZAR120,000,000. The CEO believes MidTech should borrow the funds in USs at a fixed rate from a bank in the U.S.A. and convert it into ZAR for investment. For this purpose a 5 year (60 month) currency swap transaction will be required. He wants to be provided with a 5 year currency swap proposal. Also depict the swap graphically for the CBO to see how the swap will work. Relevant information, that you will require are provided below: Exchange rates: Spot Ask $/IFY 0.0094 0.0095 $/Won 0.0006 0.0008 $/CAD 0.7614 0.7616 $/GBF 1.3034 1.3038 /AUS 0.722: 0.7226 #/ZAR 0.0605 0.0607 Current borrowing Interest rates on loans: Fixed Libor UGA 0.64036 0.13034 Japan 0.52536 0.01536 South Korea 1.1643 0.65436 Canada 0.6563 0-15676 UK 0.577% 0.0673 Australia 0.61236 0.10236 South Africa 5.045X 4.5357 ANK CURRENCY SWAP INTEREST RATE QUOTES AGAINST U.S. LIBOR RATE Yen Won CADS GBF AUS ZAR mars Bidka Askit Bid Ask Bid Bids Bid36 Askit 0.63 0.51 0.59 1.15 1.17 0.6: 0.59 0.60 5.01 0.676 2 0.621 0.54 1.10 1.18 0.61 1632 0.69 0.67 1.17 1.19 0.67 0.60 1.62 4.07 0.698 0.642 0.56 0.56 1.18 1.20 1.61 106 5.08 0.706 0.652 0.57 21 1.02 0.6 62 0.68 0.70 1.20 1.22 061 OLOL 5.10 0.720 0.672 171 0.59 1.21 1.23 0.62 1.64 0.68 5.11 0.735 1.70 0.60 1.22 1.24 0.63 5.10 5.12 0.748 2 0.692
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