Suppose that at the present time, one can enter 5-year swaps that exchange LIBOR for 8%. An off-market swap would then be defined as a swap of LIBOR for a fixed rate other than 8%. For example, a firm with 10% coupon debt outstanding might like to convert to synthetic floating-rate debt by entering a swap in which it pays LIBOR and receives a fixed rate of 10%. What up-front payment will be required to induce a counter party to take the other side of this swap? Assume notional principal is $10 million. (Do not round intermediate calculations. Round your final answer to the nearest dollar amount. Omit the "$" sign in your response.)
Up-front payment $