D 2. As a hedge, Darmko buys a two-year cap on a 6 month LIBOR of $10,000,000 with current LIBOR at 3%, suppose that in the . . first six months LIBOR rises to 3.5% second six months LIBOR rises to 4% third six months LIBOR rises to 4.5% fourth six months LIBOR rises to 5% . What will be the overall cash position of Darmko, as a holder of both the interest rate swap above and the cap at 4%, at the end of two years? (Assume the cost of the cap is $300,000) (SHOW CALCULATIONS HERE. USE NO TEXT) 1st six months: (1 %) 2nd six months: _(17) 3rd six months: _(17) 4th six months: (14) (1) Sum (over two year period) After hedge of the i-rate swap with the cap, the net position of Darmko = (2)