4 points Save Answer Question 14 Company A and Company B both seek funding at the lowest possible cost. Company A would prefer the flexibility of Roating rate borrowing, while Company B wants the security of fixed rate borrowing. They face the following rate structures Company A Company B 11% 8.5% Credit Rating Fixed Rate of Borrowing Floating Rate of Borrowing 6% 5% Company A wants floating rate debt and it could borrow at LIBOR 1%however it could borrow foxed at 8.5% and swap for a floating rate debt. Company wants fixed rate so it could borrow fixed at 11% however it could borrow floating at LIBOR 2% and swap for foxed rate debt. Company A borrows at the fixed rate and Company B borrows at the floating rate. Then they enter into a swap agreement where Company B pays Company A 8.5% at the foxed rate and Company A pays Company B the LIBOR.What are the cost savings to each party? Company A saves 1.5% in borrowing costs, Company B saves 0.5% in borrowing costs Company A saves 1.0% in borrowing costs, Company B also saves 1.0% in borrowing costs > Company A saves 1.5% in borrowing costs, Company B also saves 1.5% in borrowing costs Company A saves 1.0% in borrowing costs, Company B saves 0.5% in borrowing costs Company A saves 0.5% in borrowing costs, Company B saves 1.0% in borrowing costs