Company X and Company Y enter into an interest rate swap contract to swap fixed for floating interest rates for a notional amount of $500,000. The term of the interest rate swap is two years and the interest payments will be swapped every six months. The fixed rate on the swap is 4.75%, while the floating rates on the swap are as follows:

6-Month LIBOR

Now

4.50%

6-months from now

4.70%

12-months from now

4.90%

18-months from now

5.10%

What is the net payment that will be exchanged by the two counterparties in 18 months?

-$875

$125

-$375

$625