PLEASE DO NOT USE FINANCIAL CALCULATOR OR EXCEL

For the following three problems, you are given the following t-year spot rates: 2 3 4 5 spot rate 4% 5% 5.75% 6.25% 0.5% 6. James and Associates has a line of credit that will permit it to borrow $400,000 in year one; an aditional $200,000 in year two for a total of $600,000; and an additional $ 400,000 in year three for a total of $1,000,000. Under the loan, the interest rate resets at the beginning of each year and is equal to the one-year spot interest rate at the time of reset. James enters into a three year interest rate swap where the notional amount matches the amount available under the line of credit and variable rate matches the rate for the line of credit, Determine the swap rate