Borrower	Fixed-Rate Available	Floating-Rate Available
City of Nanjing: BBB-rated	8.4%	LIBOR+3.0%
Honda: AAA-rated	5.0%	LIBOR+0.2%

Assumptions:

1. Bank HSBC is arranging for the City of Nanjing and Honda to enter an interest swap. Each party plans to borrow $280 million for 10 years; Nanjing prefers the fixed-rate financing, while Honda is to choose the floating rate.

2. The information on financing costs available to the two parties is given in the above table.

3. Suppose that the cost savings from the swap are split equally for the three parties.

What are the nominal gains per year (in $) for each of the three parties? (10 points)