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funds at a margin of 2.54% p.a. over LIBOR. Its direct borrowing cost is 10.96%p.a. in the fixed rate bond market. In contrast, B.D. Energy,

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funds at a margin of 2.54% p.a. over LIBOR. Its direct borrowing cost is 10.96%p.a. in the fixed rate bond market. In contrast, B.D. Energy, which prefers a floating rate loan, has access to fixed rate funds in the Eurodollar bond market at 7.70% p.a. and floating rate funds at LIBOR +0.87% p.a. Suppose they enter into an interest rate swap contract, which a broker agrees to arrange for a fee of 0.35%. .a. and they agree to split the cost savings equally. Due to this arrangement, Press F will have achieved a cost of p.a. for its fixed rate money and B.D. Energy will have achieved a cost of p.a. for its floating rate money? a. 10.34\%; LIBOR+ 0.07% b. 10.34\%; LIBOR+ 0.25\% c. 10.12\%; LIBOR +0.25% d. 10.12\%; LIBOR-0.28\% e. 10.17%; LIBOR+ 0.07\%

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