What is the net interest rate for Walmart if the firm enters into a swap with the investment bank?

Suppose that Walmart has 3-year floating rate debt with an interest rate or LIBOR + 12bps, but the firm would prefer to pay a fixed rate. An investment bank is offering a fixed swap rate of 1.016% and the floating rate for any swap will be LIBOR. What is the net interest rate for Walmart if the firm enters into a swap with the investment bank?

A. 1.136%
B. 1.030%
C. LIBOR – 17bps
D. 0.896%

 

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