180/360 or 360/360

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Please explain the calculation
A pays LIBOR to B
B pays Fixed 8% to A
at t=0 libor=9%
at t=1 libor=7%
at t=2 libor=10%
Given the above , which of the following statements is CORRECT? At time period 2:
A)
B pays A $1 million.
B)
A pays B $2 million.
C)
A pays B $7 million and B pays A $8 million.
how to calculate,
i was calculating B pays (0.08-0.07)*1/2*100,000,000=500,000,
where as answer is taking B Pays (0.08-0.07)*360/360*100,000,000=1 million , why it is taking 360/360 & why not 180/360
 
Nothing of that sort is given. But the explanation given as follows.
The variable rate to be used at time period 2 is set at time period 1 (the arrears method). Therefore, the appropriate variable rate is 7%, the fixed rate is 8%, and the interest payments are netted. The fixed-rate payer, counterparty B, pays according to:
(Swap Fixed Rate - LIBORt-1)(# of days/360)(Notional Principal).
In this case, we have (0.08 - 0.07)(360/360)($100 million) = $1 million
but why is it taking 360/360 ?
 
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