An Example of an Interest Rate Swap o Firm B is a BBB-rated U.s. company. It needs S10.000000 to finance an investment with a five- year economic life Firm B is considering issuing 5-year fixed-rate Eurodollar bonds at 11.75 percent Alternatively, firm B can raise the money by issuing 5 year FRNs at liBor 2 percent Firm b would prefer to borrow at a fixed rate McGraw-Hilylrwoin 10-7 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 10-7 An Example of an Interest Rate Swap ⚫ Firm B is a BBB-rated U.S. company. It needs $10,000,000 to finance an investment with a five￾year economic life. ◼ Firm B is considering issuing 5-year fixed-rate Eurodollar bonds at 11.75 percent. ◼ Alternatively, firm B can raise the money by issuing 5- year FRNs at LIBOR + ½ percent. ◼ Firm B would prefer to borrow at a fixed rate