-If Company a and Company B Share the Interest Savings

question 7

Multiple Choice

$\begin{array}{lll}&\text { Fixed-Rate } & \text { Floating-Rate } \\&\text { Borrowing Cost } & \text { Borrowing Cost }\\\text { Company: A} & 6 \% & \text { LIBOR } \\\text { Company: B} & 5 \% & \text { LIBOR }-0.5\end{array}$
-If company A and company B share the interest savings from the interest rate swap equally,company A will pay after the swap on its preferred debt:

• A) 5.5%.
• B) 5.75%.
• C) LIBOR - 0.75%.
• D) LIBOR.

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