The treasurer of Araf plc is evaluating the possibilities of borrowing 150 million for a period of four years. Araf's credit rating is good and an assessment of borrowing opportunities indicates that it will be possible to borrow at a fixed rate of interest at 7 per cent per annum or at a floating rate of LIBOR + 1 per cent per annum. As Araf's treasurer believes that interest rates are likely to fall over the next four years she would prefer to borrow at a floating rate. Araf's bank is currently working on arranging a four year loan, also for 150 million, for another one of its customers, Begin ple. This company is smaller and less well known than Araf plc, and its credit rating is not as high. Begin ple could borrow at a fixed rate of 9 per cent per annum or a floating rate of LIBOR +1.5 per cent. Begin plc has indicated to the bank that it would prefer a fixed-rate loan. The bank has suggested the two companies engage in a swap that might benefit both of them. The bank's commission would be 0.5 per cent. Begin's treasurer suggests that any swap benefits, after allowing for the bank's commission, should be shared equally between the two companies. Explain the course of action necessary to implement the swap, draw the swap diagram and outline the financial benefits from the swap