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McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 85,000,000 at a time when the exchange rate is $1.3319/. The entire principal is to
McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 85,000,000 at a time when the exchange rate is $1.3319/. The entire principal is to be repaid in three years, and interest is 6.550% per annum, paid annually in euros. The euro is expected to depreciate vis--vis the dollar at 2.7% 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.)
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