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Johnny has got a four-year loan for $400,000. The effective annual rate (EAR) of the loan at the end of year 4 is 10%. The

Johnny has got a four-year loan for $400,000. The effective annual rate (EAR) of the loan at the end of year 4 is 10%. The interest rates for years 1 to 4 are 8.5%, 9.0%, 9.5% and 10%, respectively. Express your numerical answers in two decimal places.


What is Johnny's role in this deal?

Receiver Counter-party Payer Observer None of the options

The EAR for the first year is ____%.

The EAR for year 2 to year3 is ____%

The zero-coupon bond price of year 2 is ____%.

The zero-coupon bond price of year 4 is ____%.

What is the swap payment of year 3?

The swap interest rate is ____.


If Johnny pays $340,000 to the lender at the end of year 1, how much does he have to pay the counter-party?



How much is the present value of all the interest Johnny has to pay in four years?

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