Question: Swaps Carter Enterprises can issue floating-rate debt at LIBOR + 1% or fixed-rate debt at 9%. Brence Manufacturing can issue floating-rate debt at LIBOR

Swaps Carter Enterprises can issue floating-rate debt at LIBOR + 1% or fixed-rate debt at 9%. Brence Manufacturing can issue floating-rate debt at LIBOR + 3.4% 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 8.85% to Brence and Brence makes a payment of LIBOR to Carter. What are the net payments of 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 of Carter: 8.60 % Net payment of Brence: -(LIBOR + 0.40 %) 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 fixed-rate debt Would Brence be better off if it issued floating-rate debt or if it issued ed-rate debt and engaged in the swap? The swap is good for Brence, if it issued fixed-rate debt and engaged in the swap

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