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1 On September 30, 2018, Dolphin Company negotiated a two-year, 1,000,000 Euro loan from a German bank at an interest rate of 2 percent per
1 On September 30, 2018, Dolphin Company negotiated a two-year, 1,000,000 Euro loan from a German bank at an interest rate of 2 percent per year. Dolphin makes interest payments annually on September 30 and will repay the principal on September 30, 2020. Dolphin prepares U.S.-dollar financial statements and has a December 31 year end. a. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 Euro: September 30, 2018 b. December 31, 2018 September 30, 2019 December 31, 2019 September 30, 2020 $0.115 0.120 0.135 0.140 0.165 Determine the effective cost of borrowing in dollars in each of the three years 2018, 2019, and 2020
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