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Help with all parts would be appreciated, thank you. McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 80,000,000 at a time when the
Help with all parts would be appreciated, thank you.
McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 80,000,000 at a time when the exchange rate is $1.3404 = 1.00. The entire principal is to be repaid in three years, and interest is 6.150% per annum, paid annually in euros. The euro is expected to depreciate vis--vis the dollar at 3.2% per annum. What is the effective cost of this loan for McDougan? Complete the following table to calculate the dollar cost of the euro-denominated debt for years O through 3. Enter a positive number for a cash inflow and negative for a cash outflow. (Round the amount to the nearest whole number and the exchange rate to four decimal places.) Year O Year 1 Year 2 Year 3 Proceeds from borrowing euros Interest payment due in euros Repayment of principal in year 3 Total cash flow of euro-denominated debt Expected exchange rate, $ = 1.00 Dollar equivalent of euro-denominated cash flow
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