Question
Macrohard is a large software corporation that can obtain a 7.90% pa fixed rate of interest. Outtel is a government owned microchip manufacturing company. Outtel
Macrohard is a large software corporation that can obtain a 7.90% pa fixed rate of interest. Outtel is a government owned microchip manufacturing company. Outtel has a capital structure that is currently far less reliant upon debt than that of Macrohard, and subsequently can obtain a lower fixed interset of 7.30% pa.
a)If Macrohard can obtain a floating rate loan at BBSW+1.00%, while Outtel can obtain a floating rate of BBSW+0.60%, Macrohard has a comparative advantage over Outtel
1.in fixed rates
2.floating rates
3. neither rate.
b)If interest savings are shared equally, how much can Macrohard save on interest payments per annum by entering a swap agreement with Outtel? Give your answer as a percentage per annum to two decimal places.
Saving = ..... % pa
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