Grupo Modelo S$.$A$.$B$.$ de C$.$V$.$ Grupo Modelo, a brewery out of Mexico that exports such well$-$known varieties as Corona, Modelo, and Pacifico, is Mexican by incorporation. However, the

company evaluates all business results, including financing costs, in U$.$S$.$ dollars. The company needs to borrow $$20,000,000$ or the foreign currency equivalent for four years. For all issues,

interest is payable once per year, at the end of the year. Available alternatives are as follows:

a$.$ Sell Japanese yen bonds at par yielding $3\mathrm{.}10\%$ per annum. The current exchange rate is $\frac{104\mathrm{.}00}{\text{\$}},$ and the yen is expected to strengthen against the dollar by $2\mathrm{.}3\%$ per annum. What is

the effective cost of the yen$-$denominated loan for Grupo Modelo?

b$.$ Sell euro$-$denominated bonds at par yielding $6\mathrm{.}90\%$ per annum. The current exchange rate is $$\frac{1\mathrm{.}1980}{},$ and the euro is expected to weaken against the dollar by $2\mathrm{.}1\%$ per annum. What is

the effective cost of the euro$-$denominated loan for Grupo Modelo?

c$.$ Sell U$.$S$.$ dollar bonds at par yielding $5\mathrm{.}20\%$ per annum. What is the effective cost of the dollar$-$denominated loan for Grupo Modelo?

d$.$ Which course of action do you recommend Grupo Modelo take and why?

a$.$ Complete the following table to calculate the dollar cost of the yen$-$denominated debt for years $0$ through $4.$ Enter a positive number for a cash inflow and a negative number for a cash

outflow. $($Round the amount to the nearest whole number and the exchange rate to two decimal places.$)$

Year $0$

Cash flow in $,$

Exchange rate, $\frac{}{\text{\$}}$

Year $1$

$\frac{?}{\text{b}\text{a}\text{r}}(]$

Year $2$

Year $3$

Year $4$