Compute the payments due in the second year on a three-year amortizing swap from company B to company A. Company A and company B both want to borrow 1,000,000 for three years. A wants to borrow floating and B wants to borrow fixed. A and B agree to split the QSD.

	Fixed-Rate Borrowing Cost					Floating-Rate Borrowing Cost
Company A		10	%				LIBOR
Company B		12	%				LIBOR + 1.5	%

A) B pays 402,114.80 to A

B) B pays 100,000 to A

C) B pays 69,788.52 to A

D) none of the options