DarienHacker

That is the explaination given in the example as well.
However, the cash proceeds from raising the Floater would not be 150Mn, it would rather be 100mn. This means that either one has to purchase bonds which are in deep discount or borrow more money.
Thus there should be a borrowing cost also involved. I think that has been ignored.
This problem has troubled me a lot but now I’ve gave up and just memorised it.