Harold borrowed $5000 for two years from ACE Bank at a variable interest rate. Harold will make an interest payment to the bank at the end of each year based on the 1-year spot interest rate at the start of that year and also repays $5000 at the end of 2 years. The current one- year spot rate is 2.3% and the 2-year spot rate is 3.4%. Harold decided to enter into a two-year interest rate swap with annual settlement periods under which he will swap the variable interest rate for a fixed interest rate. One year has elapsed and the 1-year spot interest rate is 3.5% during the second year of the loan. Determine the net interest payment that Harold paid at the end of the second year. Possible Answers A 175 B 177 181 D E 169 Harold borrowed $5000 for two years from ACE Bank at a variable interest rate. Harold will make an interest payment to the bank at the end of each year based on the 1-year spot interest rate at the start of that year and also repays $5000 at the end of 2 years. The current one- year spot rate is 2.3% and the 2-year spot rate is 3.4%. Harold decided to enter into a two-year interest rate swap with annual settlement periods under which he will swap the variable interest rate for a fixed interest rate. One year has elapsed and the 1-year spot interest rate is 3.5% during the second year of the loan. Determine the net interest payment that Harold paid at the end of the second year. Possible Answers A 175 B 177 181 D E 169