A company based in the United Kingdom has an Italian subsidiary. The subsidiary generates $25,000,000$ a year, received in equivalent semiannual installments of $12,500,000.$ 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 $2\mathrm{.}1$ per pound. The fixed rate on a plain vanilla currency swap in pounds is $8\mathrm{.}2$ percent per year, and the fixed rate on a plain vanilla currency swap in euros is $7\mathrm{.}2$ percent per year.

Note: For all requirements, round the final answers to nearest whole dollar.

Required:

Determine the notional principals in euros and pounds for a swap with semiannual payments that will help achieve the objective.

Determine the semiannual cash flows from this swap.