Question: A company caps three-month LIBOR at 2% per annum. The principal amount is $20 million. On a reset date, three-month LIBOR is 4% per annum.

A company caps three-month LIBOR at 2% per annum. The principal amount is $20 million. On a reset date, three-month LIBOR is 4% per annum. What payment would this lead to under the cap? When would the payment be made?

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