Two companies have investments which pay the following rates of interest:
Firm A 6% (FIXED) || Libor (FLOAT)
Firm B 8% (FIXED) || Libor + 0.5% (FLOAT)
Assume A prefers a fixed rate and B prefers a floating rate. If an intermediary charges both parties equally a 0.1% fee and any benefits are spread equally between Firm A and Firm B. If an intermediary charges both parties equally a 0.1% fee and any benefits are spread equally between Firm A and Firm B, what rates could A and B receive on their preferred interest rate? Show all working.