My bank has asked me to make a decision to continue with a $4m loan at
4.93% interest payable monthly or fix half the amount at 5.75% for 5
years interest payable monthly. What is the gain or loss to me
if interest rates move up or down 3% over the next 5 years. Do you
have an excel spreadsheet that will supply the answer and variations
of time and interest rates.

I have answered your question using the assumption that the interest
rate rises 3% or falls 3% over the course of five years with an equal
change in each month.  I have also assumed that no principal is being
repaid during the five years.  This yields the following results:

If interest rates rise by 3% over the course of five years, the amount
of interest paid on the fully floating loan is $1,286,000 and the
amount of interest paid on the partially fixed rate loan is
$1,218,000, a difference of $68,000 in favor of the partially fixed
rate loan.

If interest rates fall by 3% over the course of five years, the amount
of interest paid on the fully floating loan is $686,000 and the amount
of interest paid on the partially fixed rate loan is $918,000, a
difference of $232,000 in favor of the fully floating loan.

In making your decision, I would note that interest rates in the
United States are at near historic lows, making the odds of interest
rates falling further less likely than the odds of interest rates
rising.  The Federal Funds Rate is already at 1%, making it unlikely
that commercial loans could fall anything like 3%.  A nice graph of
the Federal Funds Rate can be viewed at
http://www.bankrate.com/brm/news/fed/fedwatch.asp "Fed Alert"
Bankrate.com

Creating an Excel spreadsheet that would allow you to vary the timing
of the interest rate increases and decreases in any fashion would be
difficult, but I would be happy to evaluate variations on the scenario
for you as a clarification at no extra charge if needed.  I will look
into posting my spreadsheet someplace on the Web so that it is
accessible to you.

Sincerely,

Wonko