Delphi is the U.S.-based automotive parts supplier that was spun off from Genera

Question

Delphi is the U.S.-based automotive parts supplier that was spun off from General Motors in 2000. With annual sales of over US$26 billion, the company has expanded its markets far beyond the traditional automobile manufacturers in the pursuit of a more diversified sales base. As part of the general diversification effort, the company wishes to diversify the currency of denomination of its debt portfolio as well. Assume Delphi enters into a US$50 million 7-year cross-currency interest rate swap to do just that - pay euros and receive dollars. Current spot rate is US$ 1.16./ Following swap rates for both currencies are provided: Calculate all principal and interest payments in both currencies for the life of the swap. Assume that three years later. Delphi decides to unwind the swap agreement. If 4-year fixed rates of interest in euros have now risen to 5.35%. 4-year fixed rate dollars have fallen to 4.40%. and the spot exchange rate at winding is US$1.02/ what is the net present value of the swap agreement? At unwind who pays who. how much?|

Explanation / Answer

Please provide the current Swap Rates for both the currencies and the Current Interest Rates.

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