A company has funded 10 percent fixed-rate assets with variable-rate liabilities at LIBOR + 2 percent. A bank has funded variable-rate assets with fixed-rate liabilities at 6 percent. The bank's variable-rate assets earn LIBOR + 1 percent. The company and the bank have reached agreement on an interest-rate swap with the fixed-rate swap payment at 6 percent and the variable-rate swap payment at LIBOR. Briefly discuss your results.

1. What will be the net after-swap cost of funds for the bank if the cash market liabilities are included in the analysis?
2. What will be the net after-swap yield on assets for the bank?

Please explain and show work.