Company X wants to borrow $10,000,000 floating for 5 years; company Y wants to borrow $10,000,000 fixed for 5 years.

Their external borrowing opportunities are shown below.

Company X - Fixed-Rate Borrowing Cost Floating-Rate Borrowing Cost 10%; Floating-Rate Borrowing Cost LIBOR

Company Y - Fixed-Rate Borrowing Cost Floating-Rate Borrowing Cost 12%; Floating-Rate Borrowing Cost LIBOR +1.5%

A swap bank is involved and quotes the following rates five-year dollar interest rate swaps at 10.05 percent 10.45 percent against LIBOR flat. Assume company Y has agreed, but company X will only agree to the swap if the bank offers better terms. What are the absolute best terms the bank can offer X, given that it already booked Y?

A 10.45%10.05% against LIBOR flat. B 10.50%10.50% against LIBOR flat. C 10.05%10.45% against LIBOR flat. D 10.45% 10.45% against LIBOR flat.