Multiple Choice
A firm agrees to accept annual payments on a $1,000,000 loan with a fixed interest rate of 8% in exchange for making the annual payments on a loan with floating rate payments based on LIBOR.Payments are interest only with principal due in 10 years.If LIBOR falls to 7%,the firm's net cash flow will be:
A) $70,000.
B) ($10,000) .
C) $10,000.
D) $80,000.
Correct Answer:
Verified
Correct Answer:
Verified
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