Third National Bank Has Made a 10-Year, $25 Million Fixed-Rate

Third National Bank has made a 10-year, $25 million fixed-rate loan at 12 percent. Annual interest payments are $3 million, and all principal will be repaid in year 10. The bank wants to swap the fixed interest payments into floating-rate payments. If the bank could borrow at a fixed rate of 10 percent for 10 years, what is the notional principal of the swap?

A) $40 million
B) $20 million
C) $25 million
D) $30 million

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free