Your Firm Enters into a Swap Agreement with a Notional

Your firm enters into a swap agreement with a notional principal of $40 million wherein the firm pays a fixed rate of interest of 5.50 percent and receives a variable rate of interest equal to LIBOR plus 150 basis points. If LIBOR is currently 3.75 percent,the NET amount your firm will receive (+) or pay (−) on the next transaction date is

A) − $2,200,000.
B) $2,625,000.
C) $125,000.
D) − $100,000.
E) − $875,000.