Caitlin Corp (of US) wishes to raise $2 mil in US$ with debt financing. The funds will be repaid with interest in one year. Caitlin is considering the following sources:

a) borrow US dollars from Bank of America at 8%

b) borrow British pounds from Natwest at 14%

c) borrow Japanese yen from Sanwa bank at 5%

The company has no operations in Japan or in UK.

Caitlin estimates the pound will depreciate 5% relative to the dollar and yen will appreciate 3% relative to the dollar during the next year. Corp income tax rates are 35% in US, 36% in UK and 40% in Japan.

Where should Caitlin borrow?