Refer to the Following Information

Multiple Choice

Refer to the following information. A company buys an interest rate cap that pays the difference between LIBOR and 8% if LIBOR exceeds 8%. Current LIBOR is 7%. The amount of the option is €2 500 000 and the settlement is every 6 months. Assume a 360 day year.
Find the payoff if LIBOR closes at 8.2%.

A) €0.00
B) €25 000.00
C) €50 000.00
D) −€25 000.00
E) −€50 000.00