You may take account a gasoline swap contract calling for the exchange of 1 litre of gasoline at the end of each year for a period of 3 years. In this case, the discount factors for maturities of 1, 2 and 3 years are 0.97, 0.93 and 0.89. In most cases, gasoline storage generates additional costs; the proportional storage costs equal 2% per year with annual compounding. Meanwhile, there will be no convenience yield on gasoline, and the current spot price takes place at $2 per litre.

Considering a swap is a financially engineered contract that combines a position in forwards with a position in bonds, please determine what the borrowing and lending transactions look like in the 3-yr swap?