Long-term cost of debt. The Bloomberg website provides interest rate data for many countries and various maturities. Its address is http://www.

bloomberg.com.

Go to the ‘Market Data’ section of the website and then to ‘Rates and Bonds’. Consider a subsidiary of a US-based MNC that is located in Australia.

Assume that when it borrows in Australian dollars, it would pay 1% more than the risk-free (government)

rates shown on the website. What rate would the subsidiary pay for one-year debt? For five-year debt?

For ten-year debt? Assuming that it needs funds for ten years, do you think it should use one-year debt, five-year debt, or ten-year debt? Explain your answer.