Suppose that the term structure of interest rates is flat in the United States and Australia. The interest rate in the United States is 5% and the Australian rate is 7%.The current value of one Australian dollar is 0.6 US dollars.Under the terms of the agreement, a financial institution pays 7% per annum in Australian dollars and receives 4% per annum in US dollars.The principals in the two currencies are $10 million US dollars and 20 million Australian dollars.Payments are exchanged once a year, with one exchange having just taken place.The swap will last two more years.What is the value of the swap to the financial institution?