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 SF1.4 million, a one-year period, an initial spot rate of SF1.4800/$, a 5.132% cost ofdebt, and a 30% tax rate, what is the effective after-tax cost of debt for one year for a U.S. dollar-based company if the exchange rate at the end of the period was:

a.SF1.4800/$

b.SF1.4400/$

c. SF1.3750/$

d. SF1.5930/$

a. If the exchange rate at the end of the period was SF1.4800/$, what is the effective after-tax cost of debt? (Round to four decimal places.)

b. If the exchange rate at the end of the period was SF1.4400/$, what is the effective after-tax cost of debt? (Round to four decimal places.)

c. If the exchange rate at the end of the period was SF1.3750/$, what is the effective after-tax cost of debt? (Round to four decimal places.)

d. If the exchange rate at the end of the period was SF1.5930/$, what is the effective after-tax cost of debt? (Round to four decimal places.)