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 $15,000,000 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 3.40% per annum. The current exchange rate is 107.00/$, and the yen is expected to strengthen against the dollar by 2.3% per annum. What is the effective cost of the yen-denominated loan for Grupo Modlelo?

b. Sell euro-denominated bonds at par yielding 6.60% per annum. The current exchange rate is s$1.1910/euro, and the euro is expected to weaken against the dollar by 2.2% per annum What is the effective cost of theeuro-denominated loan for Grupo Modelo?

c. Sell U.S. dollar bonds at par yielding 5.10% 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?

What is the effective cost of the yen-denominated loan for Grupo Modelo? ____%

What is the effective cost of the euro-denominated loan for Grupo Modelo? ____%

What is the effective cost of the dollar-denominated loan for Grupo Modelo? ____%

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 infiow 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 Year 1 Year 2 Year 3 Year 4 Cash flow in Exchange rate, /$ 107.00 Cash flow in $ 10,000,000 S