"lluvia manufacturing and paraguas products both seek funding at the lowest possible cost. lluvia would prefer the flexibility of floating rate borrowing, while paraguas wants the security of fixed rate borrowing. lluvia is the more credit-worthy company. with the better credit rating, lluvia has lower borrowing costs in both types of borrowing. assumptions   lluvia   paraguas credit rating   aaa   bbb prefers to borrow   floating   fixed fixed-rate cost of borrowing   6.000%   12.000% floating-rate cost of borrowing:         libor (current=4%)   4.000%   4.000% spread   1.000%   4.000% total floating-rate   5.000%  
8.000%"however, it could borrow at libor + 2.000% and swap for fixed rate debt. what should they do? (libor is 5.500%)