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Embry Corp (EC) and Riddle Industries (RI) need to raise funds to pay for capital improvements at their respective facilities. EC is a well-established firm
Embry Corp (EC) and Riddle Industries (RI) need to raise funds to pay for capital improvements at their respective facilities. EC is a well-established firm with an excellent credit rating in the debt market. It can borrow funds at either a 7 percent fixed rate of LIBOR + 1 percent floating rate. RI is a new start-up without a strong credit history. It can borrow funds at a fixed rate of 6 percent or at LIBOR + 3 percent floating rate. Is there an opportunity here for EC and RI to benefit by means of an interest rate swap?
*Please use excel
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