Currency Swap and Spot Exchange Rate
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ABC Corp. entered into a currency swap with its bank, providing that ABC borrows $5 million at 10% and swaps for a 12% yen loan. The spot exchange rate is ¥105/$. If interest only is to be repaid on an annual basis, how much does ABC pay annually to the bank?
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Solution Summary
This solution converts the million dollars equivalent into Yen and determines the interest payable annually.
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