3. Regardless of your responses to questions 1 and 2, assume now that VUK is not subject to exchange risk. Should Vulkan repay its pound debts? Should VUK repay its pound loans and replace them with dollar ftnancing? If debt refunding should take place, how should it be done? Consider the tax consequences of replacing the pound debt with dollar ftnancing in both the U.K.

and the U.S.