Suppose in an interest rate swap the notional principal is $10,000,000 with a swap period of 2 years. The companies agree to exchange a fixed for a floating income stream. Parmio agrees to pay to Promise Darmko agrees to pay Barmhp LIBOR.4% 1a. Suppose at the end of the first year LIBOR is ex, which party and how much will that party ne? (SHOW CALCULATIONS HERE. USE NO TEXT) Barmko pays Darmko: Darmko pays Barmko: Barmko nets from Darmko: (1) (1) (1) 16. Suppose that the end of the second year LIBOR is 9%, which party and how much will that party net? (SHOW CALCULATIONS HERE. USE NO TEXT) (1) (1) Barmke pays Darmko: Darmko pays larmko: Barmko nets from Darmke: Over the two years Barmka nets from Darmke: (1) 2. As a hedge, Ramp buys a two-year cap on a month LIBOR of $10,000,000 with current LIBOR suppose that in the first six months UBOR rises to 5x second six months UIBOR rises to 6% third six months LIBOR rhes to 7% fourth six months LIBOR rises to 9.5% What will be the overall cash position of arms as a holder of both the interest rate swap above and the cap at 4, at the end of two years (Assume the cost of the cap is $500,000) (SHOW CALCULATIONS HERE, USE NO TEXT) 1 six month 2 months be months 11 115) 4 months Surn (over two year period) After hedge of the late swap with the cap, the net position of Darmko 121