Construct an interest rate swap schedule that shows the cash flow (net outflow) for six months for two companies using the following assumptions.Upload your cash flow file in this assignment question.Show each month's cash flow for both companies.

1) Company A has a $1,000,000 loan with monthly variable interest rates of:

Month 1 = 5%

Month 2 = 4%

Month 3 = 6%

Month 4 = 7%

Month 5 = 8%

Month 6 = 9%

2) Company B has a $1,000,000 loan with a fixed interest rate of 8%.

Note:The swap contract requires Company A to pay fixed interest of 6% on notional $1M to Company B.Company B is required to pay variable interest to Company at each month's interest rate - 1%, on notional $1M.

3) Which company benefits from the swap by creating a lower cash outflow because of the swap hedge versus no hedge?

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