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 SF1.4600/$, a 4.566% cost of debt, and a 32% 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. SF1.4600/$

b. SF1.4000/$

c. SF1.3350/$

d.SF1.5730/$

Part 1

a. If the exchange rate at the end of the period was SF1.4600/$, what is the effective after-tax cost of debt? enter your response here%

(Round to four decimal places.)

Part 2

b. If the exchange rate at the end of the period was SF1.4000/$, what is the effective after-tax cost of debt? enter your response here% (Round to four decimal places.)

Part 3

c. If the exchange rate at the end of the period was SF1.3350/$,what is the effective after-tax cost of debt? enter your response here% (Round to four decimal places.)

Part 4

d. If the exchange rate at the end of the period was SF1.5730/$, what is the effective after-tax cost of debt? enter your response here% (Round to four decimal places.)