Compute the net interest expense to be reported

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Question - On January 2, 2018, Tylor Company issued a 4-year, $600,000 note at 8% fixed interest, interest payable semiannually. Tylor now wants to change the note to a variable rate note. As a result, on January 2,2018 As a result, on January 2nd, 2018, Tylor Company enters into an interest rate swap where it agrees to receive 8% fixed and pay LIBOR of 5.5% for the first 6 months on rate is reset to 6.7% on June 30, 2018.

Required -

Compute the net interest expense to be reported for this note and related swap transaction as of June of June 30, 2018.

Compute the net interest expense to be reported for this note and related swap transaction as of December 31, 2018.

Reference no: EM132537409

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