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# Zhao Automotive issues fixed-rate debt at a rate of 7.00%.

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Zhao Automotive issues fixed-rate debt at a rate of 7.00%. Zhao agrees to an interest
rate swap in which it pays LIBOR to Lee Financial and Lee pays 6.8% to Zhao.

What is Zhao's resulting net payments?

Net payment = Libor + .02%

How would I calculate this with equations?

##### Solution Summary

Zhao Automotive issues fixed-rate debt at a rate of 7.00%. Zhao agrees to an interest
rate swap in which it pays LIBOR to Lee Financial and Lee pays 6.8% to Zhao.

What is Zhao's resulting net payments?

Net payment = Libor + .02%

How would I calculate this with equations?

##### Solution Preview

Zhao Automotive issues fixed-rate debt at a rate of 7.00%. Zhao agrees to an interest
rate swap in which it pays ...

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