Grapefruit pls needs to borrow 5,000,000 Euro now for a period of four years. Grapefruit has a credit risk premium of 2% per annum. Currently, 3 month Libor is 0.8% per annum for variable rate borrowing. Grapefruit can currently borrow at a fixed rate for 1,2, 3 or 4 years.

Clearly though Grapefruit will need to refinance itself at the end of the borrowing term selected if the term selected was less than four years.

Based on this information and the zero coupon yield curve, what does Grapefruit need to consider when deciding how to arrange its borrowing?