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What is the net cash flow for hp if they swap

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Reference no: EM132579621

HP and GE decide to swap their loans based on $2 million notional principal. HP currently pays 4.5% fixed on a loan and GE pays LIBOR + 0.6% on a floating rate loan when LIBOR was 3.8%.

What is the net cash flow for HP if they swap their fixed rate loan for a floating rate LIBOR + 0.6% loan from GE and LIBOR rises to 4.2%?

A. -$6,000

B. -$10,000

C. $5,000

D. $12,000

Reference no: EM132579621

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