List and briefly explain three factors which can affect to the differences in costs of capital in different countries. Davenport Inc. (an Australian company) found that borrowing Japanese yen (JPY) is cheaper than borrowing AUD. Assume that the Interest rate parity exists. The one year JPY forward contains premium of 4%. If the company expects JPY to appreciate by 5% percent over the next year, would its expected financing cost be lower/higher if it borrow JPY? Explain. Assume that Davenport Inc. needs Australian dollar three (03) million for a one-year period. Within one year, it will generate enough Australian dollars to pay off the loan. It is considering three options: (1) borrowing Australian dollars at an interest rate of 6%, (2) borrowing Japanese yen at an interest rate of 5%, or (3) borrowing Canadian dollars at an interest rate of 4%. Davenport Inc. expects that the Japanese yen will depreciate by 1% over the next year and that the Canadian dollar will appreciate by 2%. What is the expected "effective" financing rate for each of the three options? Which option appears to be most feasible? Why might Davenport Inc. not necessarily choose the option reflecting the lowest effective financing rate?