Suppose the U.S. yield curve is flat at 5% and the euro yield curve is flat at 4%. The current exchange rate is $1.2 per euro. What will be the swap rate on an agreement to exchange currency over a 3-year period?
The swap will call for the exchange of 2.5 million euros for a given number of dollars in each year.
(Do not round intermediate calculations. Round your answer to the nearest dollar amount. Omit the "tiny_mce_markerquot; sign in your response.)