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A company based in the United Kingdom has an Italian subsidiary. The subsidiary generates 30 million a year, received in equal semiannual installments. The British

A company based in the United Kingdom has an Italian subsidiary. The subsidiary generates 30 million a year, received in equal semiannual installments. The British company wishes to convert the euro cash flows to pounds twice a year. It plans to engage in a currency swap in order to lock in the exchange rate at which it can convert the euros to pounds. The current exchange rate is 1.52/. The fixed rate on a plain vanilla currency swap in pounds is 6.9 percent per year, and the fixed rate on a plain vanilla currency swap in euros is 5.9 percent per year. Determine the notional principals in pounds (millions XXX.XXX) for a swap with semiannual payments that will help achieve the objective.

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