Bayes 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 Bayes PLC enters into a 200 million 5-year cross currency interest rate swap to do just that pay US Dollars ($) and receive GBP (). Using the data (appearing in % terms) in the following table:

a) Calculateallprincipalandinterestpaymentsinbothcurrenciesforthelifeof the swap. The current spot exchange rate is 1.18 USD = 1 GBP (i.e. $1.18 per ).

b) Assume that, two years later, Bayes PLC decides to unwind the swap agreement. If all interest rates (as per the above table) have now uniformly decreased by 20 basis points, and the current spot exchange rate is 1.10 USD = 1 GBP, who pays whom and what? Furthermore, assume that there is a penalty of 50,000, when terminating the swap, that must be paid by Bayes PLC.