Question: Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moodys credit rating Aa Baa Fixed-rate borrowing cost 9.5%

Alpha and Beta Companies can borrow for a five-year term at the following rates:

Alpha Beta

Moodys credit rating Aa Baa

Fixed-rate borrowing cost 9.5% 12.7%

Floating-rate borrowing cost LIBOR LIBOR + 1.1%

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?

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