#2 please

NO Company A can borrow $40 million for 3 years at 8.5% or at LIBOR+0.5% while company B can borrow 540 million for 3 years at 7% or at LIBOR. While A desires fixed-rate borrowing, prefers floating-rate borrowing. The swap bank currently makes a market for plain vanilla 3-year interest rate swap at 7.25%-7.50% romat Times New S() AXEEBIU 1. Illustrate how company A and company B can benefit from the use of interest rate swap. 2. Is it possible for the swap bank to customize a 3-year interest rate swap so that company B has a cost saving of 0.6%? Explain with calculation I 3. Bonus question (attempt is not required) assume one year after A and B entered into the 3-year swaps, the swap bank quotes 2- year interest rate swaps at 6.5%-7%. Which company is willing to unwind the original swap? Explain