Question
On January 1, 2019 Panther Company received a two-year $600,000 loan. The loan calls for payments to be made at the end of each year
On January 1, 2019 Panther Company received a two-year $600,000 loan. The loan calls for payments to be made at the end of each year based on the prevailing market rate at January 1 of each year. The interest rate at January 1, 2019 was 10 percent. Panther company does not want to bear the risk that interest rates may increase in year two of the loan. Aegan company believes that rates ma decrease and they would prefer to have ha varible debt. So the two companies enter into an interest rate swap agreement whereby Aegan agrees to make panther interest payment in 2020 and panther likewise agree to make Aegans interest payment in 2020. The two companies agree to make settlement payments for the difference only on December 31 2020. If the interest rate on Jan 1 2019 is 9 percent what will be panther settlement payment to/from Aegan on December 31, 2020. r percent. A 6,000 receipt
B 6,000 payment
C12,000 payment
D12,000 receipt
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