Company A can borrow $40 million for 3 years at 8.5% or at LIBOR0.54 while company can boton 500 million for you at LIBOR. While A desires fixed-rate borrowing, prefers floating-rate borrowing. The swap bank currently makes a must for plan vanilla 3-year interest rate swap at 7.25%-7.50%, Format The New B TU 1. Illustrate how company A and company B can benefit from the use of interest rate swap 2. Is it possible for the swap bank to customize a 3-year interest rate swap so that company B has a cost saving of 0.6Explain with calculation. 3. Bonus question (attempt is not required); assume one year after A and B entered into the 3-year swips, the wapbank quotes 2- year interest rate swaps at 6.5%-7. Which company is willing to unwind the original swap? Explain