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D iscuss the differences and similarities between short-term financing and long-term financing. Which is more risky? Why? Consider that we can borrow in the U.S.
Discuss the differences and similarities between short-term financing and long-term financing. Which is more risky? Why? Consider that we can borrow in the U.S. for three years at 10 percent or in Europe for 12 percent. The current exchange rate is 1 = $1.10. Our forecast team forecasts the Euro for the following three years to be:
Yr. 1 $1.07
Yr. 2 $1.05
Yr. 3 $1.03
Suppose we need to borrow $10,000,000. Should we borrow in the U.S. or in Europe?
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