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A company issues a five-year $100M variable rate bond with the following term structure: t (years) Variable Annual Rates Year 1 6.25% Year2 7.00% Year3

A company issues a five-year $100M variable rate bond with the following term structure:
t (years) Variable Annual Rates

Year 1 6.25%

Year2 7.00%

Year3 6.50%

Year4 7.25%

Year5 7.00%

Calculate the swap rate (R) and calculate the swap payments, payments to the bondholder who agreed to receive variable payments in lieu of swap payments.

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