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    net effect to Microsoft's payment

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    8. Suppose Microsoft is paying LIBOR + 2% per annum to its lenders. If Microsoft enters into a interest rate swap with Intel to receive LIBOR+1 and pay fixed 5.9%, what will be the net effect to Microsoft's payment?

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    Solution Preview

    The net effect on Microsoft will be

    =LIBOR+2% - LIBOR - 1% + ...

    Solution Summary

    The net effect to Microsoft's payment is figured.