A UK company is opening a store in the US and needs 390$ investment. Currently exchange rate in the UK is 8.5% and Exchange Rate is 1.6 $/. Company wants to avoid exchange rate exposure by raising loan from the US. In order to get a favorable term from the US banks, UK company enters a swap with a US firm which also needs financing in UK. According to terms, US company raised 390$ financing from a US bank at a fixed interest rate of 3.5% and is payable in 3 years. Interest Payments are semi-annual.

Zero Rates in the UK and the USA are provided in the below table:

Payment	Zero Rate UK	Zero Rate US
1	0.95	0.94
2	0.94	0.91
3	0.92	0.9
4	0.9	0.88
5	0.89	0.85
6	0.88	0.82

In the below, prepare payment schedule for the UK firm and calculate the present values using Zero Rates.
Payment	UK Pays	Zero Rate	Present Value
1	Answer	Answer	Answer
2	Answer	Answer	Answer
3	Answer	Answer	Answer
4	Answer	Answer	Answer
5	Answer	Answer	Answer
6	Answer	Answer	Answer
Total			Answer
In the below, prepare payment schedule for the US firm and calculate the present values using Zero Rates.
Payment	US Pays	Zero Rate	Present Value
1	Answer	Answer	Answer
2	Answer	Answer	Answer
3	Answer	Answer	Answer
4	Answer	Answer	Answer
5	Answer	Answer	Answer
6	Answer	Answer	Answer
Total			Answer
Value of Swap
	Dollar Value of UK payments	Answer
	Dollar Value of US payments	Answer
	Net Value of Swap (UK payments - US payments)	Answer
	Who must pay to whom?	AnswerUK Firm Pays to US FirmUS Firm Pays to UK Firm