Hewitt Inc

Hewitt Inc. has entered into an equity swap arrangement that allows it to swap a fixed interest rate of 8 percent in exchange for the rate of appreciation on the Dow Jones Industrial Average each year over a three-year period. The notional principal is $1 million. If the Dow depreciates by 1 percent over the year, Hewitt will

A) have to make a payment of $70,000.
B) have to make a payment of $90,000.
C) receive a payment of $70,000.
D) receive a payment of $90,000.
E) None of these are correct.

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