Financial Management


#1

A company can borrow at a fixed rate by issuing five year bonds at 9.4% or can borrow at a variable rate of LIBOR+0.6%.I HAS BEEN QUOTED RATES OF 8.50%-8.55% FOR A FIVE YEAR plain vanilla swap.The company wants to borrow at a floating rate of interest.How much would it save by borrowing fixed and arranging a swap, compared with borowimg at a floating rate?