Question: Carter Enterprises can issue floating-rate debt at LIBOR + 2% or fixed-rate debt at 10%. Brence Manufacturing can issue floating-rate debt at LIBOR + 2.3%

Carter Enterprises can issue floating-rate debt at LIBOR + 2% or fixed-rate debt at 10%. Brence Manufacturing can issue floating-rate debt at LIBOR + 2.3% or fixed- rate debt at 12%. Suppose Carter issues floating-rate debt and Brence issues fixed-rate debt. They are considering a swap in which Carter makes a fixed-rate payment of 7.30% to Brence and Brence makes a payment of LIBOR to Carter. What are the net payments for Carter and Brence if they engage in the swap? Round your answers to two decimal places. Use a minus sign to enter negative values, if any. Net payment for Carter: % Net payment for Brence: -(LIBOR + %) Would Carter be better off if it issued fixed-rate debt or if it issued floating-rate debt and engaged in the swap? The swap is good for Carter, if it issued -Select- Would Brence be better off if it issued floating-rate debt or if it issued fixed-rate debt and engaged in the swap? The swap is good for Brence, if it issued -Select
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