Companies A and B face the following interest rates (adjusted for the differential impact of taxes): Company A US dollars (floating rate): Canadian dollars (fixed rate): LIBOR +0.5% 5.0% Company B LIBOR + 1.0% 6.5% Assume that A wants to borrow US dollars at a floating rate of interest and B wants to - borrow Canadian dollars at a fixed rate of interest. A financial institution is planning to arrange a swap and requires a 50-basis-point spread. If the swap is equally attractive to A and B, what rates of interest will A and B end up paying?

AppendixLO1