Refer to the following table. Xanadu Oil Corporation just secured a fixed interest rate loan at 7% and Rex Technologies just secured a loan at LIBOR+1%. LIBOR rises above Now the two companies are entering into an interest rate swap agreement where Xanadu will make payments to Rex at LIBOR and receive payments at 7.25% fixed rate. If after the swap deal, Xanadu would experience a loss in the deal. Interest Rate Swaps Xanadu Oil Corporation Rex Technologies Credit Rating AAA BBB Fixed rate cost of borrowing 7% 9% Floating rate cost of borrowing LIBOR +0.5% LIBOR +1.0% O 5.25% 6.25% O 7% O 7.25% O 5%