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A US firm is considering to borrow 2-year EUR 50 million paying 5% pa interest rate every 6 months. At the same time the firm
A US firm is considering to borrow 2-year EUR 50 million paying 5% pa interest rate every 6 months. At the same time the firm will enter into the 2-years cross currency swap that the firm will pay fixed interest rate 7% pa in USD and receive fixed interest rate 5% pa. in EUR. The USD notional principal is USD 60 million. The exchange rate is EUR/USD 1.2. Draw the cash flows from swap transactions as well as the loan contract including all the principal exchange and interest rate payments during swap contract.
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