Firm a Is Paying $300,000 in Fixed Interest Payments a Year

Multiple Choice

Firm A is paying $300,000 in fixed interest payments a year while Firm B is paying LIBOR plus 30 basis points on $5 million loans.The current LIBOR rate is 5.5 percent.Firm A and B have agreed to swap interest payments.What is the net payment between these firms this year?

A) Firm A pays $10,000 to Firm B
B) Firm B pays $10,000 to Firm A
C) Firm B pays $12,500 to Firm A
D) Firm A pays $15,000 to Firm B
E) Firm B pays $15,000 to Firm A