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

Multiple Choice

Third National Bank has made a 10-year,$25 million fixed-rate loan at 12%.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% for 10 years,what is the notional principal of the swap?

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