c. Interest Rate Swap
			Cash Flows
Bond outstanding			Original	Swap Pmts.	Net
Maturity (yrs.)		Year 1
Fixed rate		Year 2
Spread over LIBOR		Year 3
LIBOR:		Year 4
Years 1-2		Year 5
Years 3-4		Year 6
Years 5-6		Year 7
Years 7-10		Year 8
		Year 9
		Year 10
			Present value of net

c. Because its financial position has strengthened considerably very recently, Apache Airlines is offered an interest rate swap-fixed to floating (LIBOR). The details are as follows: Current Apache bond maturity - 10 years Bond face value - $200M Current bond rate - 6% per year, fixed Floating rate - LIBOR + 100 basis points Projected LIBOR rates: 4.5% (years 1-2),5% (years 3-4), 5.5% (years 5-6),5% (years 7-10) Show the cash flows for Apache and the present value gain/loss of doing the swap. c. Because its financial position has strengthened considerably very recently, Apache Airlines is offered an interest rate swap-fixed to floating (LIBOR). The details are as follows: Current Apache bond maturity - 10 years Bond face value - $200M Current bond rate - 6% per year, fixed Floating rate - LIBOR + 100 basis points Projected LIBOR rates: 4.5% (years 1-2),5% (years 3-4), 5.5% (years 5-6),5% (years 7-10) Show the cash flows for Apache and the present value gain/loss of doing the swap