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3. YankeeCo needs 550 million Brazilian Real (BR) to set up a new subsidiary there. YankeeCo is relatively unknown outside the USA so borrowing Real

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3. YankeeCo needs 550 million Brazilian Real (BR) to set up a new subsidiary there. YankeeCo is relatively unknown outside the USA so borrowing Real directly in Brazil would be difficult at a good rate and need a long regulatory processing time. The current exchange rate is 5.5 BR/$. At the current exchange rate, the US$ value of the 550 mill. Brazilian Real is $100 million. Yankee will issue in the U.S. $100 million of 4-year debt with semi-annual interest payments at a floating rate of LIBOR +2.0. 6- month LIBOR is presently 4.0%. Yankee is worried that the LIBOR rate will rise soon and desires locking in a fixed rate in a currency swap. Yankee contracts for a SWAP with Trusty Bank. In the Swap, Trusty will pay Yankee straight LIBOR every 6 months in exchange for Yankee paying fixed 6.40% annual rate semi-annually to Trusty A pts ea. a - h Enter answers below (show amount and currency, $ or BR, on each answer): 3a. At initial rates, each 6 months (= -5 Yr), Yankeeco pays its US lenders the amount a 3b. At t=0 swap start, Yankee Co pays to TRUSTY the initial amount 30. At current interest rates, every 6 months, (180/360), TRUSTY pays to Yankeeco C 3d. At current interest rates, every 6 months (180/360), Yankee Co pays TRUSTY D 3e. At current Libor, YankeeCo cach 6 months needs to come up with how much more besides Swap receipts to cover its US lenders' debt payments 3F. The LIBOR rate for the last 6 months of the Swap rose to 5.6%. The final total closing swap payment at end t4 from Trusty to Yankee is 3g. The LIBOR rate for the last 6 months of the Swap rose to 5.6%. The final total closing swap payment at end t4 from Yankee to TRUSTY IS G 3h. The LIBOR rate for the last 6 months of the Swap rose to 5.6%. The final total closing payout at end 4 from Yankee to its original USA lenders is

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