ABC CorpEntered into a Currency Swap with Its Bank, Providing That

ABC Corp.entered into a currency swap with its bank, providing that ABC borrows $5 million at 10 percent and swaps for a 12 percent yen loan.The spot exchange rate is ¥105/$.If interest only is to be repaid on an annual basis, how much does ABC pay annually to the bank? (answer in millions)

A) ¥1.26 million
B) ¥5.71 million
C) ¥52.50 million
D) ¥63.00 million

Correct Answer:

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