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August PLC is a UK-based energy trading company. The management of the company aims to diversify the currency of denomination of its debt portfolio. Assume
August PLC is a UK-based energy trading company. The management of the company aims to diversify the currency of denomination of its debt portfolio. Assume that August PLC enters in a 100 million 4-year cross currency interest rate swap to do just that - pay euros () and receive GBP (). Using the data (appearing in % terms) in the following table: a) Calculate all principal and interest payments in both currencies for the life of the swap. The current spot exchange rate is 1.1EUR=1GBP (i.e. 1.1 per ). (10 marks)
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