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The table below presents the costs of borrowing for FaceBook and Tesla in Euros and Pounds, and the quotes for interest swaps in Euros and

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The table below presents the costs of borrowing for FaceBook and Tesla in Euros and Pounds, and the quotes for interest swaps in Euros and Pounds, both quoted against LIBOR. FaceBook would like to get a fixed rate Pound loan. Tesla would like to get a fixed rate Euro loan. How much can Tesla save by entering a currency swap agreement? Borrowing Cost Borrowing Cost in Euro in Pound 10.00% 13.10% 10.80% 12.00% FaceBook Tesla GBP Swap Bank Quote EURO Bid 10.00% Ask Bid 12.00% Ask 12.10% 10.25% O 55 bps 480 bps

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