1. Interserve and Kier Group can borrow for one year at the following rates:

	Interserve	Kier Group
Fixed rate	4.50%	5.10%
Floating rate	LIBOR + 0.15%	LIBOR + 0.35%

1. Develop an interest rate swap in which both companies have an equal saving in their borrowing costs. Assume Interserve desires floating-rate debt and Kier desires fixed-rate debt and that the intermediary swap bank demands a 0.1% fee on the transaction.