One year ago, a risk manager entered a $50 million 5-year interest rate swap as the fixed rate payer. The fixed rate was 2.875%. 4-year interest rates are now 3.675% and the swap has an estimated modified duration of 3.65. The fair value of the swap from the risk managers perspective is closest to:

1. Loss of $1,825,000
2. Gain of $1,460,000
3. Loss of $1,437,500
4. Gain of $1,875,000