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Steelers & Penguins Sports Clubs both seek the lowest financing cost. They face the following rates: Steelers Penguins Credit Rating A BBB Cost of fixed

Steelers & Penguins Sports Clubs both seek the lowest financing cost. They face the following rates:

Steelers Penguins

Credit Rating A BBB

Cost of fixed funds 4.0% 5.5%

Cost of floating funds 6 MO Libor + 1.00% 6 MO Libor + 1.75%

If a swap is set up such that any potential savings are divided equally between the two clubs, what will be the net post swap cost for Penguins?

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