You intend to raise 90d money

You intend to raise 90d money to finance a working capital requirement. Given the 2 financing options with respective quotations from your bank, which one gives the lower funding cost. As a clue, calculate the effective cost of option B which is borrowing in USD, then enter into a swap transaction by selling the USD spot today (to convert a USD into PHP) and buying the USD forward on 90th day (to convert back PHP to USD). Calculate excluding tax implications. A) Bilateral Peso Loan (3mth bval 1.25% + credit spread 2.00%) 3.25% ——- B) USD Swapped for PHP (Sell/Buy) 3mth libor 0.125% Credit spread of USD borrowing 2.000% USD/PHP spot rate 48.00 USD/PHP 3mth forward rate 48.12 Effective Cost ——-?

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