1. Companies A and B have entered the following interest rate swap on a $30 million three-year notional principal, where A pays 4% fixed rate and received LIBOR, and B pays LIBOR and receives 4% fixed rate. Explain the cash flow schedule for A if the six-month LIBOR rates in the following three years look like this table:

	Now	4.2 (%)	Floating (mil $)	Fixed (mil $)	Net (mil $)
6	months later	4.8
12	months later	5.3
18	months later	5.5
24	months later	5.6
30	months later	5.9
36	months later