Mr McCaw, Managing Director of GOAT Ltd, believes that interest rates will begin to rise, however GOAT has a large amount of debt at floating interest rates. Through an agent a counterparty has been found with opposite opinions and debt interest type positions. + GOAT can borrow at a fixed rate of 4.5% or a variable rate of LIBOR + 1.75%. The counterparty, Saffa plc, can borrow at LIBOR + 3.375% variable or 1.3% higher than GOAT if fixed. The agent requires a 0.15% fee of the principal amount for arranging the swap. (a) Evaluate whether the swap should be performed, and if it should, what are the terms? (10 marks) Should GOAT want to expand overseas they have two main options for raising the finance: 1. Borrow in the country they want to expand in to (in foreign currency) 2. Borrow domestic currency and perform a currency swap- (b) Critically assess these two approaches, identifying the possible benefits and weak points of each alternative. (Max word count is 100 words) (10 marks) Mr McCaw, Managing Director of GOAT Ltd, believes that interest rates will begin to rise, however GOAT has a large amount of debt at floating interest rates. Through an agent a counterparty has been found with opposite opinions and debt interest type positions. + GOAT can borrow at a fixed rate of 4.5% or a variable rate of LIBOR + 1.75%. The counterparty, Saffa plc, can borrow at LIBOR + 3.375% variable or 1.3% higher than GOAT if fixed. The agent requires a 0.15% fee of the principal amount for arranging the swap. (a) Evaluate whether the swap should be performed, and if it should, what are the terms? (10 marks) Should GOAT want to expand overseas they have two main options for raising the finance: 1. Borrow in the country they want to expand in to (in foreign currency) 2. Borrow domestic currency and perform a currency swap- (b) Critically assess these two approaches, identifying the possible benefits and weak points of each alternative. (Max word count is 100 words) (10 marks)