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5. DVR Inc. can borrow dollars for five years at a coupon rate of 2.75 percent. Alternatively, it can borrow yen for five years at
5. DVR Inc. can borrow dollars for five years at a coupon rate of 2.75 percent. Alternatively, it can borrow yen for five years at a rate of .85 percent. The five-year yen swap rates are 0.640.70 percent and the dollar swap rates are 2.412.44 percent. The currency /$ exchange rate is 87.575. Determine the dollar AIC and the dollar cash flow that DVR would have to pay under a currency swap where it borrows 1,750,000,000 and swaps the debt service into dollars. This problem can be solved using the Excel spreadsheet CURSWAP.xls
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