C is correct. By convention, an FRA is usually settled at the beginning of the period covered by the FRA. The settlement amount is the present value of the difference in interest amounts with the discount rate being the floating rate. Therefore, the cash flow under the FRA must be discounted back to the beginning of the quarter.

The fixed rate payer's cash flow per quarter is: 0.25 × 0.0225 × EUR 10,000,000 = EUR 56,250

The floating rate payer's cash flow at the one year date is: 0.25 × 0.018 × EUR 10,000,000 = EUR 45,000

The net cash flow is a payment by the fixed rate payer of EUR 11,250, but this is undiscounted.

The payment must be discounted at the floating rate: EUR 11,250 / (1 + 0.018/4) = EUR 11,200

A is incorrect. The payment is calculated using the floating rate at 9 months, and the result is not discounted properly.

B is incorrect. This value does not correspond to the correct calculation of the discounted cash flow under the FRA.

D is incorrect. This is the undiscounted net cash flow, but the FRA settlement requires discounting the payment to the beginning of the period.