(Solved): Intro A bank is party to a currency swap where it pays \( 7 \% \) per year in dollars on a principa ...

Intro A bank is party to a currency swap where it pays \( 7 \% \) per year in dollars on a principal of \( \$ 20 \) million, and receives \( 5 \% \) per year in yen on a principal of 2,000 million yen. Interest payments are annual, and principals are exchanged at the maturity date of the swap, in 2.7 years. The current exchange rate is \( \$ 0.0097 \) per yen. Japanese interest rates are \( 7 \% \) and U.S. interest rates are \( 11 \% \) for all maturities. Part 1 What is the dollar cash flow in 2.7 years (in \$ million)? Part 2 What is the yen cash flow in 2.7 years (in million of yen)? Part 3 What is the forward exchange rate in 2.7 years (in dollars per yen)? Part 4 What is the dollar value of the yen cash flow in 2.7 years (in \$ million)? Part 5 What is the net cash flow in 2.7 years (in \$ million)? Part 6 What is the present value of the net cash flow in 2.7 years (in \$ million)? Part 7 What is the value of the currency swap to the bank (in \$ million)?