Interest Rate Swaps	Xanadu Oil Corporation	Rex Technologies
Credit Rating	AAA	BBB
Fixed rate cost of borrowing	7%	9%
Floating rate cost of borrowing	LIBOR +0.5%	LIBOR +1.0%

Refer to the following table. A swap deal, that lowers the cost of each company by 75 basis points, is possible if

a)Xanadu borrows at LIBOR+0.5% and Rex borrows at the fixed rate of 7%

b)Xanadu borrows at 7% fixed; Rex borrows at LIBOR+1%. Then they enter into a swap deal where Xanadu makes payments at LIBOR and receives fixed rate payments at 7.25%

c)Rex borrows at LIBOR+1% and Xanadu borrows at LIBOR+0.5%

d)Xanadu borrows at 5% fixed; Rex borrows at LIBOR+1%. Then they enter into a swap deal where Xanadu makes payments at LIBOR and receives fixed rate payments at 5.25%

e)Xanadu borrows at 5% fixed; Rex borrows at LIBOR+1%. Then they enter into a swap deal where Xanadu receives payments at LIBOR and makes fixed rate payments at 5.25%