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 SF1.6 million, a one-year period, an initial spot rate of SF1.5500/$, a 4.789% 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. If the exchange rate at the end of the period was SF1.5500/$, what is the effective after-tax cost of debt?

b. If the exchange rate at the end of the period was SF1.5100/$, what is the effective after-tax cost of debt?

c. If the exchange rate at the end of the period was SF1.4560/$, what is the effective after-tax cost of debt?

d. If the exchange rate at the end of the period was SF1.6960/$, what is the effective after-tax cost of debt?