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