A Finance Company with Variable-Rate Assets and Fixed-Rate Liabilities Wants

A finance company with variable-rate assets and fixed-rate liabilities wants to do a swap to have a better maturity match and finds a counterparty with fixed-rate assets and variable-rate liabilities to do an asset swap. The amount of the swap is $100,000,000, and the finance company agrees to pay the counterparty a variable rate equal to LIBOR +4% each year while the counterparty will pay the finance company a fixed rate of 10%. At the time of the Swap, LIBOR was 6%, so no cash flows were exchanged. In year 2, LIBOR is 4%, what will be the cash exchange and to which party?

A) $200,000 cash flow to the finance company
B) $2 million cash flow to the finance company
C) $2 million cash flow to the counterparty