An interest rate swap where the annual fixed rate is 4.00% has a remaining life of nine months. Both floating and fixed rates are paid every six months. The floating payments are indexed on the six-month LIBOR rate. The six-month LIBOR rate observed three months ago was 3.25% with semi-annual compounding. Todays LIBOR rates for 3-month and 9-month deposits are 3.5% and 4.0%, respectively. These two rates are annual and continuously compounded.

1. Calculate the forward LIBOR rate for the period between three and nine months assuming semi-annual compounding.
2. If the swap has a principal value of $10,000,000, what is the value today of the swap to the party receiving the fixed rate of interest?