Company X and Company Y have been offered the following borrowing rates Fixed Rate / Floating Rate Company X: 4.7% 3-month floating plus 25bp Company Y: 3.6% 3-month floating plus 5 bp Suppose that company X borrows to the floating rate and company Y borrows to the fixed rate offered above. If they enter into a swap with each other where the apparent benefits are shared equally, what is company Xs effective borrowing rate? Recall that one basis point (bp) is 0.01%. According to my teacher the answer is 4.25%, but according to your website, it is 3.85%. Can you verify the answer and show the calculations step-by-step?