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Alpha and Beta Companies can borrow for a five - year term at the following rates: Alpha Beta Moody s credit rating Aa Baa Fixed

Alpha and Beta Companies can borrow for a five-year term at the following rates:
Alpha Beta
Moodys credit rating Aa Baa
Fixed-rate borrowing cost 10.3%12.5%
Floating-rate borrowing cost LIBOR LIBOR +1%
If there is no swap bank involved, and Alpha wants to borrow through floating debts and desires 70% of the total benefit from the swap. How much could Alpha save from the swap? In other words, the all-in-cost for Alpha is LIBOR - B% through the swap, and B is worth 70% of the swap's total benefit (For example, if the total benefit of the swap is 2%, then B =0.7 x 2%=1.4%, you enter your answer as "1.4").

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