Twin Oaks Brewery (TOB) needs to borrow $20 million immediately. It can borrow for three years at a fixed rate of 7.5% or at a floating rate of LIBOR + 40 basis points. Plain vanilla fixed-for-floating swaps are quoted at 80/75. What is the fixed rate paid by TOB in the swap?
a) 7.5%
b) 7.7%
c) 7.8%
d) 8.0%