Ananse could borrow at a floating rate of Libor+ 0.5%. it could also borrow at a fixed rate of 5.5% and swap for a floating rate loan. Furs on the other hand could borrow at a fixed rate of 6.5%. Furs could also borrow at a floating rate of Libor + 1.2%. Libor (USD) was currently 4.5%

Assume that Furs borrows floating at the market rate whilst Ananse Corp borrows fixed at the market rate. Further, assume that Ananse Corp. and Furs enter into a swap where Ananse pays a floating rate of LIBOR and receives a fixed rate of 5.5%. Show the distribution of gains between Ananse Corp. and Furs.

Who benefits the most from this swap arrangement?

What are the possible dangers of entering into the interest rate swap above?