A year ago a bank entered into a $52 million five-year interest rate swap. It agreed to pay company A each year a fixed rate of 5% and to receive in return LIBOR. When the bank entered into this swap, LIBOR was 4%, but now interest rates have risen, so on a 4-year interest rate swap the bank could expect to pay 5½% and receive LIBOR.
Suppose that at this point company A approaches the bank and asks to terminate the swap. If there are four annual payments still remaining, how much should the bank charge A to terminate
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