Calculate the US dollar cash flows and final payments

Assignment Help Financial Management

Reference no: EM131512024

An Australian exporter has a retail operation in the US and they want to swap the US dollars into Australian dollars. The exporter would like to swap USD1,000,000 over 3 years and agree to make annual interest payments at the fixed rate of 5.5%. They also agree to receive an equivalent Australian dollar amount over 3 years at the fixed annual interest payment of 4%. The spot exchange rate is AUD1.36/USD. i. Calculate the US dollar cash flows and final payments ii. Calculate the Australian dollar cash flows and the final receipts from this arrangement

Reference no: EM131512024

Questions Cloud

Find the inflation rates and interest rates : Find the inflation rates and interest rates for 2016 calendar year for Australia, US, UK, China, Germany and Japan.

Lower interest costs by borrowing offshore on covered basis : Can the Australian firm achieve lower interest costs by borrowing offshore on a covered basis?

Risk factors incorporated in fama-french three factor models : What are the risk factors incorporated in the Fama and French three factor models? How are they measured?

MNEs strategies for internationalising their cost of capital : What are the factors that determine the efficiency of MNEs’ strategies for internationalising their cost of capital?

Calculate the US dollar cash flows and final payments : Calculate the US dollar cash flows and final payments. Calculate the Australian dollar cash flows and the final receipts from this arrangement.

Should they buy or sell the interest rate futures contract : As a financial advisor, you have been provided with the following information. Should they buy or sell the interest rate futures contract?

What would be short-run implication of each pricing strategy : What would be the short-run (one-year) implication of each pricing strategy?

What should the exchange rate be at the end of the year : Assuming purchasing power parity holds, what should the exchange rate be at the end of the year?

Value lodges owns an economy motel chain : Value Lodges owns an economy motel chain and is considering building a new 200-unit motel.

User Account

All Pages