If a company with a fixed-rate debt of 11% enters into a swap and pays floating-rate debt
Question:
If a company with a fixed-rate debt of 11% enters into a swap and pays floating-rate debt of 8% and receives fixed-rate payments of 9%, its net cost of debt becomes: A. 9% B. 10% C. 11% D. 12% why can this questions directly 11% +8% -9%, why not need to like say get the profit of 11%-9%, and each party get the equal reward then the net cost of borrowing= 8%+1%
If a company with a fixed-rate debt of 11% enters into a swap and pays floating-rate debt of BBSW+1.20% and receives fixed-rate payments of 9%, its net cost of debt becomes: A. 11% B. BBSW+0.20% C. BBSW+2.20% D. 12% choose b why first question can 11%+8%- 9% why can't this questions be the same as 11% +BBSW+1.20% -9%??
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill