A swaption gives the holder the right to receive 7.6% in a 5-year swap starting in 4

Question:

A swaption gives the holder the right to receive 7.6% in a 5-year swap starting in 4 years. Payments are made annually. The forward swap rate is 8.0% with annual compounding and its volatility is 25% per annum. The principal is $1 million and risk-free (OIS) rates for all maturities are 7.8% (continuously compounded). Use Black's model to price the swaption. Compare your answer to that given by DerivaGem.

Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...