Johnson Ltd $\bullet$ Period 1 = 4 $\bullet$ Period 2 = 5 $\bullet$

Multiple Choice

Johnson Ltd.enters into a 3-year, $2.0 million plain vanilla interest rate swap and agrees to pay a fixed rate of 4.0% and receive LIBOR.Payments are completed every six-month based on the LIBOR at the beginning of each six month period.LIBOR had the following values for each six-month period:
$\bullet$ Period 1 = 4.50%
$\bullet$ Period 2 = 5.0%
$\bullet$ Period 3 = 4.25%
$\bullet$ Period 4 = 4.0%
$\bullet$ Period 5 = 4.25%
$\bullet$ Period 6 = 4.55%
Based on this information what is the amount of the third payment?

A) Zero
B) $2,500
C) $5,000
D) $10,000.