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(d) Dynasty Corporation and Narva International enter into 3 years currency swap of USD 1 million to finance a project in each other's country of
(d) Dynasty Corporation and Narva International enter into 3 years currency swap of USD 1 million to finance a project in each other's country of the same size. Below are the details of the swap Dynasty Narva Country United States Europe Interest rate 4.5 percent 3.85 percent Spot exchange rate EUR/USD = 1.27 i. ii. Calculate the interest amount that each firm needs to serve at the end of the year. (4 marks) Assume the exchange rate after 1 year is EUR/USD = 1.32, calculate the amount that Dynasty Corporation and Narva International need to pay in dollar terms. (4 marks)
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