Floating payments equal to libor plus

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The Bank of Tennessee has negotiated a plain vanilla swap in which it will exchange fixed payments of 4 percent for floating payments equal to LIBOR plus 0.2 percent at the end of each of the next three years. In the first year, LIBOR is 4 percent; in the second year, 4. percent; in the third year, LIBOR is 3 percent. What is the total net payment the Bank of Tennessee makes over the three-year period if the notional principal is $10 million?

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Reference no: EM131334437

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