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QUESTION 19 Below is a table of the fixed and floating rates at which Spear plc and Theatre plc can borrow. Spear plc is a
QUESTION 19 Below is a table of the fixed and floating rates at which Spear plc and Theatre plc can borrow. Spear plc is a large company requiring floating rate debt, while Theatre plc is a medium-sized company requiring fixed rate debt. Fixed Floating Spear plc 4.3% LIBOR - 1.5% Theatre plc 10.0% LIBOR If a bank arranges an interest rate swap for an overall fee of 1.5%, and the remaining benefit is split equally between Spear plc and Theatre plc, what will be the post-swap interest rates paid by the two companies
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