3. Raid Gauloises. Raid Gauloises is a rapidly growing French sporting goods and adventure racing outfit- ter. The company has decided to borrow 20,000,000 via a euro-euro floating rate loan for four years. Raid must decide between two competing loan offerings from two of its banks. Banque de Paris has offered the four-year debt at euro-LIBOR +2.00% with an up-front initiation fee of 1.8%. Banque de Sorbonne, however, has offered euro-LIBOR + 2.5%, a higher spread, but with no loan initiation fees up-front, for the same term and principal. Both banks reset the interest rate at the end of each year. Euro-LIBOR is currently 4.00 %. Raid's econo- mist forecasts that LIBOR will rise by 0.5 percent- age points each year. Banque de Sorbonne, however, officially forecasts curo-LIBOR to begin trending upward at the rate of 0.25 percentage points per year. Raid Gauloises's cost of capital is 11%. Which loan proposal do you recommend for Raid Gauloises?