A U.S. MNC needs to raise capital of $100 million by issuing bonds. The firm can either raise US$ at 6% interest rate or issue foreign bond in Germany denominated in Euro at 3%. The Euro is expected to appreciate by 2% in the following year. What is the best alternative and how much is the effective dollar cost? Borrow dollar, and the effective dollar cost is approximately 4% Borrow Euro, and the effective dollar cost is approximately 5% Borrow Euro, and the effective dollar cost is approximately 7% Borrow dollar, and the effective dollar cost is approximately 5%