Solution-Compute the payments due in the first year

Compute the payments due in the first year

Reference no: EM133056830

Compute the payments due in the first year on a three-year amortizing swap from company B to company A. Company A and company B both want to borrow £1,000,000 for three years. A wants to borrow floating and B wants to borrow fixed. A and B agree to split the QSD.

	Fixed-Rate Borrowing Cost		Floating-Rate Borrowing Cost
Company A	10	%	LIBOR
Company B	12	%	LIBOR + 1.5	%

A) B pays £402,114.80 to A

B) B pays £100,000 to A

C) B pays £69,788.52 to A

D) None of the options

Reference no: EM133056830

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Compute the payments due in the first year

Reference no: EM133056830

Reference no: EM133056830

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