Explanation
The LIBOR rate to use is the one at the beginning of the period, is 4.5%. The fixed rate payer owes 5%, and the floating rate payer owes 4.5% + 100bps. Thus the fixed rate payer will receive a payment equal to 0.5% for six months on $1m. This works out to $2500.(Recall that a fixed for floating interest rate swap exchanges fixed for floating rate payments, with only the net payment being made by either party.) The LIBOR rate to use is the one at the beginning of the period, is 4.5%. The fixed rate payer owes 5%, and the floating rate payer owes 4.5% + 100bps. Thus the fixed rate payer will receive a payment equal to 0.5% for six months on $1m. This works out to $2500.
(Recall that a fixed for floating interest rate swap exchanges fixed for floating rate payments, with only the net payment being made by either party.)