Company AAA wants to borrow $20,000,000 at a floating rate for 5 years; Company BBB wants to borrow $20,000,000 at a fixed rate for 5 years. Their external borrowing opportunities in the debt markets are shown below:

	Fixed-Rate Borrowing Cost	Floating-Rate Borrowing Cost
Company AAA	3%	LIBOR + 0.25%
Company BBB	4%	LIBOR + 1%

a. A swap bank proposes the following five-year interest only swap: Company AAA issues debt in the market for $20 million fixed at 3.0% for 5 years. Each year Company AAA will pay the swap bank annual interest payments on $20,000,000 with the coupon rate of LIBOR + 0.15%; in exchange the swap bank will pay to Company AAA interest payments on $20,000,000 at a fixed rate of 3.0%. What is the annual dollar value of this swap to Company AAA?

b. The same swap bank proposes the following five-year interest only swap: Company BBB issues debt in the market totaling $20 million at a floating rate of LIBOR + 1%. Each year Company BBB will pay the swap bank annual interest payments on $20,000,000 with a fixed rate of 3.9%; in exchange the swap bank will pay to Company BBB interest payments on $20,000,000 at a floating rate of LIBOR + 1%. What is the annual dollar value of this swap to Company BBB?

c. By arranging the above two swaps to coincide in time, what is the annual dollar value of this swap to the swap bank?