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Suppose that Tesla has arranged to borrow $100 million at 3.2% fixed interest rate and wishes to switch to a floating rate linked to LIBOR.

image text in transcribed Suppose that Tesla has arranged to borrow $100 million at 3.2% fixed interest rate and wishes to switch to a floating rate linked to LIBOR. Tesla contacts Citigroup and enters into the swap where Citigroup agrees to pay Tesla a fixed interest rate of 2.97% on a notional principal of $100 million and in return Tesla agrees to pay to Citigroup LIBOR rate on the same notional principal. a. Show the interest payments on Tesla' borrowings, net cash flow from swap, and total payments. b. What interest rate will Tesla pay on that floating rate loan

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