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6. Falcor. Falcor is the U.S.-based automotive parts supplier that was spun-off from General Motors in 2000. With annual sales of over $26 billion, the

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6. Falcor. Falcor is the U.S.-based automotive parts supplier that was spun-off from General Motors in 2000. With annual sales of over $26 billion, the company has expanded its markets far beyond traditional automobile manufacturers in the pursuit of a more diversified sales base. As part of the general diversification effort, the company wishes to diversify the currency of denomination of its debt portfolio as well. Assume Falcor enters into a $50 million 7-year cross-currency interest rate swap to do just that-pay euros and receive dollars. Using the data in Exhibit 8.12, solve the following: a. Calculate all principal and interest payments in both currencies for the life of the swap. b. Assume that three years later Falcor decides to unwind the swap agreement. If 4-year fixed rates of interest in euros have now risen to 5.35%, 4-year fixed rate dollars have fallen to 4.40%, and the current spot exchange rate is $1.02/, what is the net present value of the swap agreement? Explain the payment obligations of the two parties precisely

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