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solve i and ii A Ltd, a low rated firm desires a fixed rate, long term loan. It currently has access to floating interest rate

solve i and ii

A Ltd, a low rated firm desires a fixed rate, long term loan. It currently has access to floating interest rate funds at a margin of 1.5% over the Prime Rate. Its direct borrowing cost is 13% in the fixed rate bond market. B Ltd which prefers a floating rate loan has access to fixed rate funds in cedi-bond market at 11% and floating rate funds at Prime Rate + %.

You are required: (i) To explain how A Ltd and B Ltd can use swap to their advantage.

(ii) Calculate how much Asaba Ltd would pay for its fixed rate funds.

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