10. Sally has borrowed 300,000 from The Bank. She will repay 100,000 of principal at the end of each of the first three years. Sally will pay The Bank a variable interest rate equal to the one year spot interest rate at the beginning of each year. Sally would like to have a fixed interest rate so she enters into an interest rate swap with Sam. Under the interest rate swap, Sally will pay a fixed rate to Sam and Sam will pay a variable rate to Sally. The variable rate will be the same rate that Sally is paying to The Bank. The other terms of the swap will mirror the loan that Sally has. You are given the following spot interest rates: Term Annual Spot Interest Rates 2.5% 3% 4% Calculate the swap interest rate for Sally's swap. 10. Sally has borrowed 300,000 from The Bank. She will repay 100,000 of principal at the end of each of the first three years. Sally will pay The Bank a variable interest rate equal to the one year spot interest rate at the beginning of each year. Sally would like to have a fixed interest rate so she enters into an interest rate swap with Sam. Under the interest rate swap, Sally will pay a fixed rate to Sam and Sam will pay a variable rate to Sally. The variable rate will be the same rate that Sally is paying to The Bank. The other terms of the swap will mirror the loan that Sally has. You are given the following spot interest rates: Term Annual Spot Interest Rates 2.5% 3% 4% Calculate the swap interest rate for Sally's swap