
Ultimate access to all questions.
Two companies, C and D, have the borrowing rates shown in the following table.
| Company | Fixed Borrowing | Floating Borrowing |
|---|---|---|
| C | 10% | LIBOR+50bps |
| D | 12% | LIBOR+100bps |
According to the comparative advantage argument, what is the total potential savings for C and D if they enter into an interest rate swap?