Foreign Exchange Risk and the Cost of Borrowing Swiss Francs. The chapter demonstrated that a firm borrowing in a foreign currency could potentially end up paying a very different effective rate of interest than what it expected. Using the same baseline values of a debt principal of SF1.7 million, a one-year period, an initial spot rate of SF 1.5300 $ a 4.846% cost of debt, and a 30% tax rate, what is the effective after tax cost of debt for one year for a US dollar-based company if the exchange rate at the end of the period was: a. SF1.5300/S b. SF1.4900/$ c. SF1.4250/S d. SF1.6540/$