On September $30,2023,$ Peace Frog International $($PFI$)($a U$.$S$.-$based company$)$ negotiated a two$-$year, $2,200,000$ Chinese yuan loan from a Chinese bank at an interest rate of $4$ percent per year. The company makes interest payments annually on September $30$ and will repay the principal on September $30,2025.$ PFI prepares U$.$S$.$ dollar financial statements and has a December $31$ year$-$end. Relevant exchange rates are as follows:

Date U$.$S$.$ Dollar per Chinese Yuan $($CNY$)$

September $30,2023$ $ $0\mathrm{.}110$

December $31,20230\mathrm{.}115$

September $30,20240\mathrm{.}130$

December $31,20240\mathrm{.}135$

September $30,20250\mathrm{.}160$

Required:

Prepare all journal entries related to this foreign currency borrowing.

Taking the exchange rate effect on the cost of borrowing into consideration, determine the U$.$S$.$ dollar "effective borrowing rate" on the loan in each of the three years $2023,2024,$ and $2025.$