(Interest rate swap)Marx and Winter, Inc. operates a chain of retail clothing stores throughout the Midwestern part of the U.S. The firm recently entered into a loan agreement for $9 million that carries a floating rate of interest equal to LIBOR plus 50 basis points (one-half percent). The loan has a 5-year maturity and requires the firm to make semiannual payments. At the time the loan was being negotiated, Marx and Winter was approached by its banker with a suggestion as to how the firm might lock in the rate of interest on the loan at 6.2 percent using a fixed-for-floating interest rate swap. Under the agreement the company would make a cash payment to the swap counterparty equal to the fixed-rate coupon payment and receive in return a coupon payment reflecting the floating rate. (Ignore transaction costs.)a.Calculate the swap cash flows over the next five years based on the set of hypothetical LIBOR rates in ATTACHED....

b.What would motivate a firm's management to enter into a swap contract?

a.Calculate the swap cash flows over the next five years based on the set of hypothetical LIBOR rates:(Round to the nearest dollar.)

Year (A) 0.00 0.50 1.00 50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 6-Month LIBOR Rate (B) 5.44 7.20% 6.40 5.92% 6.24% 6.88% 7.20% 7.36% 6.72% 6.08% Fixed-Rate Floating- Rate Net Swap Cash Flow Coupon Coupon Fixed for Floating (D) Year (A) 0.00 0.50 1.00 50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 6-Month LIBOR Rate (B) 5.44 7.20% 6.40 5.92% 6.24% 6.88% 7.20% 7.36% 6.72% 6.08% Fixed-Rate Floating- Rate Net Swap Cash Flow Coupon Coupon Fixed for Floating (D)