Alpha and Beta Companies can borrow for a five - year term at the following rates: Alpha Beta Moody's credit rating Aa Baa Fixed - rate borrowing cost 10.3% 12.5% Floating - rate borrowing cost LIBOR LIBOR + 1.1% If there is a swap bank involved and earns 20% of the swap's total benefit. Alpha wants to borrow through floating debts and desires 70% of the total benefit from the swap, and Beta takes the rest of the swap benefit. What is the all-in-cost for Beta through the swap? (if your answer is 10.1%, just enter "10.1").
Alpha and Beta Companies can borrow for a five - year term at the following rates: Alpha Beta Moody's credit rating Aa Baa Fixed - rate borrowing cost 10.3% 12.5% Floating - rate borrowing cost LIBOR LIBOR + 1.1% If there is a swap bank involved and earns 20% of the swap's total benefit. Alpha wants to borrow through floating debts and desires 70% of the total benefit from the swap, and Beta takes the rest of the swap benefit. What is the all-in-cost for Beta through the swap? (if your answer is 10.1%, just enter "10.1").
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter24: Enterprise Risk Management
Section: Chapter Questions
Problem 4P
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Alpha and Beta Companies can borrow for a five - year term at the following rates: Alpha Beta Moody's credit rating Aa Baa Fixed - rate borrowing cost 10.3% 12.5% Floating - rate borrowing cost LIBOR LIBOR + 1.1% If there is a swap bank involved and earns 20% of the swap's total benefit. Alpha wants to borrow through floating debts and desires 70% of the total benefit from the swap, and Beta takes the rest of the swap benefit. What is the all-in-cost for Beta through the swap? (if your answer is 10.1%, just enter "10.1").
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