Compact Company prefers floating$-$ to fixed$-$rate debt. Forecast Company prefers fixed$-$ to floating$-$rate debt.

Assume the following information for Compact and Forecast Companies:

Fixed$-$Rate Bond Variable$-$Rate Bond

Compact Company $8\%$ LIBOR $+1\%$

Forecast Company $9\mathrm{.}75\%$ LIBOR $+1\mathrm{.}25\%$

A$)$ Given this information, is interest rate swap feasible?

B$)$ If interest rate swap is feasible, then what should Compact Company and Forecast Company do to meet each other$$s needs and share the interest rate saving equally? Please show your calculation of the agreement conditions.

C$)$ Use probability analysis with a range of five LIBOR rates to analyze when each company is indifferent about the swap agreement, when each company benefits and loses with and without the interest rate swap.