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McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 75,000,000 at a time when the exchange rate is $1.3302/. The entire principal is to

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McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 75,000,000 at a time when the exchange rate is $1.3302/. The entire principal is to be repaid in three years, and interest is 6.450% per annum paid annually in euros. The euro is expected to depreciate vis--vis he dollar at 3.4% 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 0 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 2 Year 3 Year 1 Year 0 75,000,000 Proceeds from borrowing euros Interest payment due in euros Repayment of principal in year 3 (75,000,000) Total cash flow of euro-denominated debt Expected exchange rate, $/E 1.3302 Dollar equivalent of euro-denominated cash flow S

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