Boeing has entered into a 10 year interest rate swap with Bank America with a notional principal of $500 million. Boeing has agreed to pay LIBOR – the floating rate side of the swap. Bank America has agreed to pay a fixed rate of 7%. Assume that next year, LIBOR is 7.5%. The net payment at that date will be:
a. Boeing pays Bank America $502,500,000
b. Boeing pays Bank America $2,500,000
c. Bank America pays Boeing $25,000,000
d. Boeing pays Bank America $3,750,000
e. Bank America pays Boeing $2,500,000