QUESTION 1 Save Prow Company AAA will borrow $1,000,000 for ten years at a fixed rate of 6%. Company BBB will borrow for ten years at a floating rate of LIBOR +1% for $1,000,000. AAA's rates available are the following: Borrow fixed rate at 6% Borrow variale rate (floating rate) at LIBOR +0.5% AAA prefers to borrow at variable rate. BBB's rates available: Borrow fixed at 7.5% Borrow floating at LIBOR+1% BBB prefers to borrow fixed The details regarding the swap contract is as follows. Swap bank will pay AAA 6% while AAA pays to the bank at LIBOR +0.25% (note that AAA's original debt is $1,000,000 at 6 %). Swap bank will pay BBB LIBOR+1% and BBB pays the bank fixed rate of 7.25%. Note that BBB's original debt is $1,000,000 of LIBOR+1%. What is the value of this swap to firm AAA? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)