Solution-Compute the net interest expense to be reported

Compute the net interest expense to be reported for this

Reference no: EM13484897

(Fair Value Hedge) On January 2, 2010, Mac Cloud Co. issued a 4-year, $100,000 note at 6% fixed interest, interest payable semiannually. Mac Cloud now wants to change the note to a variable-rate note. As a result, on January 2, 2010, Mac Cloud Co. enters into an interest rate swap where it agrees to receive 6% fixed and pay LIBOR of 5.7% for the first 6 months on $100,000. At each 6-month period, the variable rate will be reset. The variable rate is reset to 6.7% on June 30, 2010.

(a) Compute the net interest expense to be reported for this note and related swap transaction as of June 30, 2010.
(b) Compute the net interest expense to be reported for this note and related swap transaction as of December 31, 2010.

Reference no: EM13484897

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Compute the net interest expense to be reported for this

Reference no: EM13484897

Reference no: EM13484897

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