Question 10 Plymouth plc wishes to borrow 80 million at a fixed interest rate to fund a project. The firm would pay a fixed rate of 6% p.a., but can alternatively borrow with a floating rate LIBOR+3% p.a. Truro plc is currently looking to borrow 80 million for a project with a floating interest rate. The company would pay a floating rate of LIBOR+2.4% p.a., but can alternatively borrow with a fixed rate of 5% p.a. The two companies decide to enter a swap in which the benefit is shared equally. In the agreement, Plymouth plc's swap payment to Truro plc is to be 5% p.a. Which of the following statements about the swap agreement is most likely to be true? Plymouth plc receives LIBOR+1.2% p.a. from Truro plc Truro plc's net borrowing cost is LIBOR+3.2% p.a. Truro plc borrows 80m loan from its bank at a floating rate of LIBOR+3% p.a. D Plymouth plc's net borrowing cost is 5.8% p.a. E Each company can save 0.4% p.a., benefiting equally from the swap B mo Question 10 Plymouth plc wishes to borrow 80 million at a fixed interest rate to fund a project. The firm would pay a fixed rate of 6% p.a., but can alternatively borrow with a floating rate LIBOR+3% p.a. Truro plc is currently looking to borrow 80 million for a project with a floating interest rate. The company would pay a floating rate of LIBOR+2.4% p.a., but can alternatively borrow with a fixed rate of 5% p.a. The two companies decide to enter a swap in which the benefit is shared equally. In the agreement, Plymouth plc's swap payment to Truro plc is to be 5% p.a. Which of the following statements about the swap agreement is most likely to be true? Plymouth plc receives LIBOR+1.2% p.a. from Truro plc Truro plc's net borrowing cost is LIBOR+3.2% p.a. Truro plc borrows 80m loan from its bank at a floating rate of LIBOR+3% p.a. D Plymouth plc's net borrowing cost is 5.8% p.a. E Each company can save 0.4% p.a., benefiting equally from the swap B mo