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 here:

	Fixed-Rate		Floating-Rate
	Borrowing Cost		Borrowing Cost
Company X	10%		LIBOR
Company Y	12%		LIBOR + 1.5%

A swap bank proposes the following interest-only swap: X will pay the swap bank annual payments on $10,000,000 at a rate of LIBOR 0.15 percent; in exchange, the swap bank will pay to company X interest payments on $10,000,000 at a fixed rate of 9.90 percent. What is the value of this swap to company X?

the answer is one of the following~

Company X will only break even on the deal.

Company X will save 15 basis points per year on $10,000,000 = $15,000 per year.

Company X will save 5 basis points per year on $10,000,000 = $5,000 per year.

Company X will save 25 basis points per year on $10,000,000 = $25,000 per year.