The following table shows the borrowing opportunities for two firms.
Firm A Firm B
Fixed rate 11.75 % 9.5%
Floating rate LIBOR + 0.75% LIBOR

Firm A can raise the money by issuing 5-year floating-rate notes at LIBOR + 0.75 %. However, Firm A would prefer to borrow at a fixed rate. On the other hand, Firm B is considering issuing 5-year fixed-rate Eurodollar bonds at 9.5 percent. It would make more sense for Firm B to issue floating-rate notes at LIBOR in order to finance floating-rate Eurodollar loans. Finally, the swap bank makes the following offers to both firms.

a) What is the gain for each party: the Swap Bank, Firm A, and Firm B based on the QSD? Show your work. (40points)
b) Firm A and B face the same financing option as the above table. However, the Swap Bank offers a new LIBOR financing as in the table below. That is, the Swap bank provides two firms with LIBOR rate only. If Firm A gains 0.50% from this swap, figure out the ask price for LIBOR. What are the gains for the Swap Bank and Firm B, respectively? Show your work. (90points)
U.S. $ Bid Ask
5 year 10.00 % ( )%

PLEASE SEE ATTACHMENT