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Lluvia and Paraguas. Lluvia Manufacturing and Paraguas Products both Book tunding at the lowest possible cost, Lluvia would prefer the flexibility of floating rate borrowing,
Lluvia and Paraguas. Lluvia Manufacturing and Paraguas Products both Book tunding at the lowest possible cost, Lluvia would prefer the flexibility of floating rate borrowing, while Paraguas wants the security of foxed rate borrowing, Lluvials the more creditworthy company. Thay from the following rate structure Lluvia, with the better credit rating, has lower borrowing costs in both types of borrowing. Luvia waits floating rate debt so it could borrow at LIBOR 1000% However, it could borrow foed at 8.500% and swap for floating rate debt. Paraguas wants foed-rate debt so it could borrow foed at 12.500% However, it could borrow floating W LIBOR 2.000% and wap for fixed rate debt. What should they do? (LIBOR I 5.500%) Luvias comparative advantages . (Round to the decimal places)
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