GlobalPetrol Corp, Exxon, and Shell want to borrow $500,000. GlobalPetrol Copr and Shell require a variable...

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GlobalPetrol Corp, Exxon, and Shell want to borrow $500,000. GlobalPetrol Copr and Shell require a variable rate loan to finance its business resources while Exxon requires a fixed rate to meet its finance obligation rate. GlobalPetrol Copr, Exxon, and Shell have 5-year, 5-year, and 4-year of time horizons respectively. Somatsu Investment offers to swap their interest rates while offering an arbitrage opportunity to exploit their comparative advantage Table: 1 Firms Interest Rates and Time Horizon Fixed Floating Cash Flow Time Horizon GlobalPetrol Corp 4% L-0.1% $500,000 5 Exxon 5.2% L+0.6% $500,000 5 Shell 5.2% L+0.6% $500,000 4 Compute the net borrowing costs by designing a Vanilla interest rate swap for the correct parties in which Somatsu Investment acts as an intermediary, taking 0.1% as a fee and the higher-rated firm will share 70% of the swap benefit. (Refer Table 1) (10 marks) GlobalPetrol Corp, Exxon, and Shell want to borrow $500,000. GlobalPetrol Copr and Shell require a variable rate loan to finance its business resources while Exxon requires a fixed rate to meet its finance obligation rate. GlobalPetrol Copr, Exxon, and Shell have 5-year, 5-year, and 4-year of time horizons respectively. Somatsu Investment offers to swap their interest rates while offering an arbitrage opportunity to exploit their comparative advantage Table: 1 Firms Interest Rates and Time Horizon Fixed Floating Cash Flow Time Horizon GlobalPetrol Corp 4% L-0.1% $500,000 5 Exxon 5.2% L+0.6% $500,000 5 Shell 5.2% L+0.6% $500,000 4 Compute the net borrowing costs by designing a Vanilla interest rate swap for the correct parties in which Somatsu Investment acts as an intermediary, taking 0.1% as a fee and the higher-rated firm will share 70% of the swap benefit. (Refer Table 1) (10 marks)