Intro

Greenland Company and Redland Company have been offered the following interest rates on a $$30$ million five$-$year loan by their bank:

Fixed rate Floating rate

Greenland $7\mathrm{.}1\%$ LIBOR $+0\mathrm{.}8\%$

Redland $5\mathrm{.}6\%$ LIBOR $+0\mathrm{.}2\%$

Greenland wants a fixed rate loan, while Redland wants a floating$-$rate loan. The bank will take a commission of $0\mathrm{.}3\%.$

What should the companies do$?$

Check all that apply:

Redland should borrow at a floating rate.

Greenland should receive floating and pay fixed on a swap.

Redland should pay floating and receive fixed on a swap.

Greenland should borrow at a floating rate.