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Question on interest pay through Grecian Tile

Grecian Tile Manufacturing of Athens, Georgia borrows $1,500,000 at LIBOR and a lending margin of 1.25 percent per annum on six-month rollover basis through London bank.  If six-month LIBOR is 4 ½ percent in the first six-month interval and 5 3/8 percent over the second six-month interval, how much will Grecian Tile pay in interest in the first year of its Eurodollar loan?

Solution:   $1,500,000 x (.045 + .0125)/2 + $1,500,000 x (.05375 + .0125)/2
                                  = $43,125 + $49,687.50 = $92,812.50.

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