A firm can borrow at a floating rate of LIBOR + 2.5% on short-term loans.It swaps its short-term payments so that it receives LIBOR + 1.25% and pays a fixed rate of 3.75%.If the notional principal is $100 million,what is the amount the firm pays under the swap?
A)$1.25 million
B)$2.5 million
C)$3.75 million
D)$5 million
E)$7.5 million

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The Answer of A firm can borrow at a floating rate of LIBOR + 2.5% on short-term loans.It swaps its short-term payments so that it receives LIBOR + 1.25% and pays a fixed rate of 3.75%.If the notional principal is $100 million,what is the amount the firm pays under the swap?
A)$1.25 million
B)$2.5 million
C)$3.75 million
D)$5 million
E)$7.5 million

A Firm Can Borrow at a Floating Rate of LIBOR