The ABC Corporation has issued fixed-rate bonds and wants to effectively convert this fixed-rate debt...
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Accounting
The ABC Corporation has issued fixed-rate bonds and wants to effectively convert this fixed-rate debt to floating-rate debt. To accomplish this, ABC enters a plain vanilla interest rate swap with a swap bank with a fixed rate of 5.2% and a floating rate of SOFR. The notional principal of the swap is $50 million, and interest is paid semi-annually. The current SOFR is 4.5%. Six months later, SOFR is 5.4%. Calculate the net payment due on the swap at the end of the first six-month period.
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