Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

Task1. Company AAA desires to borrow $20,000,000 at a floating rate for five years; Company BBB desires to borrow $20,000,000 at a fixed rate for five years. Their external borrowing opportunities in debt markets are given below in a table:

 

Fixed-Rate Borrowing Cost

Floating-Rate Borrowing Cost

Company AAA

3%

LIBOR + 0.25%

Company BBB

4%

LIBOR + 1%

a. A swap bank intends the following five year interest only swap: Company AAA issues debt in market for $20 million fixed at 3.0% for five years. Each and every year Company AAA will pay the swap bank yearly interest payments on $20,000,000 with the coupon rate of LIBOR + 0.15%; in exchange the swap bank will pay to Company AAA interest payments on $20,000,000 at a fixed rate of 3.0%. What is annual dollar value of this swap to Company AAA?

b. The same swap bank intends the following five-year interest only swap: Company BBB issues debt in the market totalling $20 million at a floating rate of LIBOR + 1%. Each and every year Company BBB will pay the swap bank yearly interest payments on $20,000,000 with a fixed rate of 3.9%; in exchange the swap bank will pay to Company BBB interest payments on $20,000,000 at a floating rate of LIBOR + 1%. What is annual dollar value of this swap to Company BBB?

c. By arranging the above two swaps to correspond in time, what is annual dollar value of this swap to the swap bank?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93836

Have any Question? 


Related Questions in Financial Accounting

Infrastructure of homeland security hmls 4081 i choose the

Infrastructure of Homeland Security (HMLS 408) 1. I choose The Department Of Energy 2. Parts I and II are to be submitted as one submission, in the form of a continuous document. Make sure to delineate/identify part I an ...

Assignmentconsider the listing at 4815 catoctin san diego

Assignment Consider the listing at 4815 Catoctin San Diego, CA 92115 Price $475,000 Bob Betty Homebuyers want to make an offer on this property at the list price. Bob earns $48,000 per year and Betty earns $54,000 per ye ...

Project part i peyton approved - budget variance reportyou

Project Part I Peyton Approved - Budget Variance Report You are a manager for Peyton Approved, a pet supplies manufacturer. This responsibility requires you to create budgets, make pricing decisions, and analyze the resu ...

Exxon versus chevronaccording to the textbook the income

Exxon versus Chevron According to the textbook, the income statement measures the success of a company's operations for a given period. The income statement is important to investors and creditors, because it determines ...

Is there something in your life that is typically

Is there something in your life that is typically considered credible (product, tradition, performance technique, equipment, etc.) that you believe needs to be critically challenged? What and why?

Assignmentthe company is premier inc that needs to be usedi

Assignment The company is Premier Inc. that needs to be used. I will need a 3-4 pageanalysis and a Power Point presentation (no more than 10 slides) Write your paper, read carefully, and consider possible edits and chang ...

Noting discussion of supreme court decisions 1 meritor

Noting discussion of Supreme Court decisions: 1) Meritor Savings Bank v. Mechelle Vinson and 2) Oncale v. Sundowner Offshore, research both cases online and respond to the following questions. 1. Provide a paragraph summ ...

The president of state university wants to forecast student

The president of State University wants to forecast student enrollment for this academic year based on the following historical data: year Enrollments 5 years ago 15,000 4 years ago 16,000 3 years ago 18,000 2 years ago ...

Exercise 1 fixed versus variable cost behaviornasenko

Exercise 1: Fixed versus variable cost behavior Nasenko Company's cost and production data for two recent months included the following:                            March    April Production (units)   200       400 Rent   ...

Part 1 please respond the following question no less then

PART 1 PLEASE RESPOND THE FOLLOWING QUESTION NO LESS THEN 350 WORDS (ORIGINAL WORK, NO PLAGIARISM, 1 Reference Part 1 of our week discussion questions require us to discuss Profitability. Please watch this Youtube lectur ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro