Calculation of swap and loan amount for euros

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Reference no: EM1316506

International finance requires calculation of swap and loan amount for euros with given exchange rates

Mayo Corp. plans to modernize its German manufacturing facility. The estimated financing needs are 30 million Euros. It finds it can get better financing terms if it issues $27 million of 6-year, 8% notes in the U.S. capital markets. Simultaneously, it enters into an agreement with its German bank for an equivalent Euro loan swap. The euro loan carries 10% interest rate. Assume an exchange rate of $0.90/Euro. Show me Mayo Corporation's year zero, year one, and year six cashflow in both Dollars and Euros for each year. Show me issue dollar loan, swap dollars for euro and net cashflow for each of these years. Also, inflows are show as positive values.

Reference no: EM1316506

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