What is the all-in-cost for beta through the swap

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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:                       10.1%              12.3%

Floating-rate borrowing cost:                     LIBOR         LIBOR + 1.1%

Problem 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?

Reference no: EM132933226

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