Currency swaps and intrest rate swaps

Fitzharris Co Counterparty difference
fixed rate 4.60% 4.80% 0.20%
floating rate Base+0.5% base+1.3% 0.80%

Although Fitzharris has an absolute advantage in both fixed and variable rate borrowing but it has
a comparative advantage in floating borrowing and hence it should borrow at floating

Total interest paid by both parties before bank charges without the swap base+5.9%
Total interest paid by both parties before bank charges with the swap base+5.3%

potential savings from the swap before bank charges 0.60%
Savings after the swap 0.50%

The working of swap

Fitzharris co will borrow at the floating of base+0.5%an counter party will borrow at the fixed rate of 4.8%
with both paying each other’s interests and balancing payments being made between them

Fitzharris Co will pay interest before bank charges of 4.6%-(0.6%*0.5)=4.3%
Counterparty will pay interest before bank charges of base+1.3%-(0.6*0.5%)=base+1%

Fitzharris Co Counterparty
Interest payment 4.8% Base+0.5%
counter party’s payment to Fitz -0.50% 0.50%
interest before bank charges 4.30% base+1%
Bank charges 0.05% 0.05%
effective interest 4.35% base+1.05%

whether the interest rates go up or down by 0.4% Fitzharris co will pay interest of 4.35%

hello sir! I have been attempting the risk management questions in Kaplan kit and whenever there is an interest rate swap or currency swap question, I use the above method which is always different from what it is in the Kaplan model answer, but the answer is always the same. In the above question it was not mentioned whether the company wanted to borrow fixed or variable I always calculate the gain like this

Total interest paid by both parties before bank charges without the swap base+5.9%
Total interest paid by both parties before bank charges with the swap base+5.3%

potential savings from the swap before bank charges 0.60%

when it is not mentioned at what rate the company wants to borrow, I just assume that if they borrowed with the worst combination of fixed and variable compared with the best combination of fixed and variable and I calculate the interest payable before bank charges to calculate what payment will be made from one company to another. I think it works but I am afraid that the examiner might deduct marks if I used this approach. This is mostly like how you explained in your lecture, and I do not like the Kaplan approach can you please tell me if I should answer the questions like this or not.