The Star Chemical Company wants to raise $150M with a 5-year loan to finance an expansion of one of its production plants. Based on its moderate credit ratings, Star can borrow 5-year funds at a 10.5% fixed rate or at a floating rate equal to LIBOR + 75 BP. Given the choice of financing, Star prefers the fixed-rate loan. The Moon Development Company is also looking for 5-year funding to finance its proposed $150M office park development. Given its high credit rating, suppose Moon can borrow the funds for 5 years at a fixed rate of 9.5% or at a floating rate equal to the LIBOR + 25 BP. Given the choice, Moon prefers a variable-rate loan. In summary, Star and Moon have the following fixed and floating rate loan alternatives:

Company	Fixed Rate	Floating Rate
Star Company Moon Company	10.5% 9.5%	LIBOR + 75 BP LIBOR + 25 BP

Mood has Absolute advantage in Both Markets, while Star has as comparative advantage in the floating rate market. If a total of 0.50% savings have to be split equally between both;

A. What is the effective cost to Star & Moon after the interest rate swap assuming that the savings were split equally. Find both effective COSTS to each.