Level 2 Derivatives Question on Currency Swap

Mr./Mrs. Gurus, need your help for a question regarding the equation on currency swap.

Basically, there are currency swap transaction going on between AUD and USD. Borrowing amount is 100M AUD with exchange rate of 1.14 AUD per USD. It is one year contract, long party receiving AUD at initiation and pay back in USD. Quarterly exchange its payment, with annualized rates being 2.7695% for AUD and 0.2497% for USD.

I can understand what transaction and how much it exchanged at initiation.
I can understand how much of each currency is being changed quarterly.
I can understand how to calculate the present value factors for each rates on USD, AUD that are given on the table.
I can understand the transaction of terminal cashflow exchanged.

I have a problem understanding on the equation of the value to the firm receiving AUD.
It says Notional principal*[0.00692381(3.967683)+0.986031]-1.13(87,719,298)

I can see that 0.00692381 is the quarterly int.rate for payment so if you multiply by the 3.967683 (sum of PV factors) it should be the sum of present value of all the quarterly int.rate for payment. But why would you add 0.986031 (the final present value factor for AUD payment)?

I know my question is long, I also have hard time to study Lv.2 since all the questions and examples are too long to study. I would really appreciate your time and support.


The first term is the PV of all the interest payments and the last term is the PV of the par value/notional. Rewriting it in this form:

0.00692381(3.967683) + 1 \times 0.986031

makes it clearer