On January 1, 20X3, Shuey Company Borrowed $1,000,000 at a Variable

Multiple Choice

On January 1, 20X3, Shuey Company borrowed $1,000,000 at a variable rate based on LIBOR + 1.5% for 10 years with interest payable semi-annually.Shuey anticipates that interest rates will rise and has also arranged to receive a variable rate based on LIBOR + 1.5% in exchange for the payment of a 10% rate of interest.LIBOR rates were as follows on the reset dates: ?

$$\begin{array} { l r r } & \text { LIBOR rate } & \text { FV of swap } \\\text { January } 1,20 \mathrm { X } 3 & 8.5 \% & \\\text { July } 1,20 \mathrm { X } 3 & 8.7 \% & \$ 40,000 \\\text { January } 1,20 \mathrm { X } 4 & 8.8 \% & \$ 37,000\end{array}$$ How much interest expense is recognized for the six months ended December 31, 20X3?

A) -$51,500
B) -$50,000
C) -$51,000
D) -$51,200