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A firm agrees to accept annual payments on a $1,000,000 loan with a fixed interest rate of 8% in exchange for making the annual payments
A firm agrees to accept annual payments on a $1,000,000 loan with a fixed interest rate of 8% in exchange for making the annual payments on a loan with floating rate payments based on LIBOR. Payments are interest only with principal due in 10 years. If LIBOR falls to 7%, the firm's net cash flow will be: a. ($10,000). b. $10,000. c. $80,000
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