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 SF1.5million, a one-year period, an initial spot rate of 1.5300/$, a 5.381% cost of debt, 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.1.5300/$

b.SF1.4600/$

c.SF1.3950/$

d.SF1.6540

A. If the exchange rate at the end of the period was SF1.5300/$,what is the effective after-tax cost of debt?

B.If the exchange rate at the end of the period was SF1.4600/$,what is the effective after-tax cost of debt?

C. If the exchange rate at the end of the period was SF1.3950/$,what is the effective after-tax cost of debt?

D. If the exchange rate at the end of the period was SF1.6540/$,what is the effective after-tax cost of debt?