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Problem:

Desert Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 17%. The firm then enters into an interest rate swap where it pays LIBOR and receives a fixed 12% on notional principal of $100 million.

Required:

Question: What is the firm's overall cost of funds?

Note: Please describe comprehensively and provide step by step solution.

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Category:- Basic Finance
Reference No.:- M91175048

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