Boivis Patisseries Sarl is a French chain of patisseries that has an extensive network of shops in continental Europe. As part of their expansion strategy, they are looking to set up shops in the United States. Boivis estimates that it will initially require $50 million to set up shops and cover working capital requirements. The finance directors at Boivis have looked at directly borrowing in USD but have found that costs would be $LIBOR + 100 BP. The decision is made to borrow for four years in euros at a Euribor + 60 BP rate with interest paid quarterly and enter a currency swap to exchange euros for dollars. The basis on the Eurodollar swap is being quoted at 20 basis points (20 BP). The swap pays variable interest on both legs on a quarterly settlement basis. The current $/ exchange rate is $1815. Three-month Euribor is 1.5% and $LIBOR is 2.0% at swap initiation. Three months later at the first settlement date, three-month Euribor is 1.6% and $LIBOR is 1.9%.

Compute the principal flows exchanged at the start and end of the swaps tenor. Compute the interest payments at the first and second settlement dates on the swap and the cost to Boivis for its synthetic dollar loan.