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Current fixed rate available for company a

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Reference no: EM131106764

Company A, a lower-rated firm, desires a fixed-rate long-term loan. Company A presently has access to floating interest rate funds at a margin of 1.2% over LIBOR. In contrast, company B, a higher-rated firm, prefers a floating-rate loan. Company B has access to fixed-rate funds at 10.5% and floating-rate funds at LIBOR+0.7%. Both companies enter into an interest rate swap with Bank C. Based on the swap, Bank C would gain 0.2% and each of the two companies would gain 0.5%. What is the current fixed rate available for Company A?

Select one:

a. 13.4%
b. 12.2%
c. 9.6%
d. 12.9%
e. 8.8%
f. 11.8%

Reference no: EM131106764

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