Question: This question is a slight variation of the above problem. It's the same set-up as before, but now we have an intermediary who charges a

This question is a slight variation of the above problem. It's the same set-up as before, but now we have an intermediary who charges a 0.3% intermediation fee.

Companies A and B have been offered the following rates per annum on a $20M five-year loan. Company A requires a floating-rate loan. Company B requires a fixed rate loan. Design a swap that will appear equally attractive to both parties (split any gains from the swap right down the middle). Remember that the intermediary will take a 0.3% intermediation fee.

Fixed Rate Floating Rate
Company A 4.8% LIBOR + 0.3%
Company B 6.6% LIBOR + 0.8%

After the swap you designed, at what fixed rate of interest does Company B borrow?

(Enter 11.51% as 0.1151. Required precision: 0.0001 +/- 0.0001)

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