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

SteelersPenguins

Credit RatingABBB

fixed funds4.0%5.5%

floatingfunds6MOLibor6 MOLibor+ 0.50%

If a swap is set up such that any potential savings are divided such that Steelers gain 60% of the possible savings and Penguins gain 40 percent of the savings, what will be the net post swap cost for Penguins?

a.4.9%

b.Libor

c.Libor- 0.1%

d.5.10%