January 1st, 2001 Lone pine capital has purchased a credit default swap on $20 million worth of Spanish debt from Goldman Sachs (i.e., Goldman Sachs is the seller of the CDS and must deliver payment upon a Spanish default). The contract requires that Lone Pine pays 400 basis points per year each year for 5 years on December 31st (i.e, the first annual payment is due December 31st 2001). On June 31, 2002, six months after Lone Pines last payment to Goldman, the Spanish government defaults. The Spanish debt is now worth $.75 per $1.00. How much must Goldman Sachs pay Lone Pine Capital?

The answer is $4,600,000. Please show how to get there.