Lluvia and Paraguas. Lluvia Manufacturing and Paraguas Products both seek funding at the lowest possible cost. Lluvia would prefer the flexibility offloating-rate borrowing, while Paraguas wants the security offixed-rate borrowing. Lluvia is the more creditworthy company. They face the following rate structure.Lluvia, with the better creditrating, has lower borrowing costs in both types of borrowing. Lluvia wantsfloating-rate debt, so it could borrow at LIBOR+1.000%. However, it could borrow fixed at 8.000% and swap forfloating-rate debt. Paraguas wantsfixed-rate debt, so it could borrow fixed at 12.000%. However, it could borrow floating at LIBOR+2.000% and swap forfixed-rate debt. What should theydo? (LIBOR is 5.000%.)

Lluvia's comparative advantage is nothing%. (Round to three decimalplaces.)