companies X and Y have been offer the following rates per annum of a $10 million five year investment

Companies X and Y have been offered the following rates per annum on a $10 million 5-year investment: Fixed Rate Floating Rate Company X 6.0% LIBOR Company Y 7.0% LIBOR+0.2% Company X requires a fixed-rate investment; company Y requires a floating-rate investment. An interest rate swap will net a bank, acting as intermediary, 0.2% per annum and will appear equally attractive to X and Y. After this swap, Company Y earns on its investment. 7.3% 7.4% LIBOR+0.5% LIBOR+0.6%