Question
On September 30, 2015, Ericson Company negotiated a two-year, 2,400,000 dudek loan from a foreign bank at an interest rate of 4 percent per year.
On September 30, 2015, Ericson Company negotiated a two-year, 2,400,000 dudek loan from a foreign bank at an interest rate of 4 percent per year. It makes interest payments annually on September 30 and will repay the principal on September 30, 2017. Ericson prepares U.S.-dollar financial statements and has a December 31 year-end.
| September 30, 2015 | $ | 0.130 | |
| December 31, 2015 | 0.135 | ||
| September 30, 2016 | 0.150 | ||
| December 31, 2016 | 0.155 | ||
| September 30, 2017 | 0.180 | ||
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| a. | Determine the effective cost of borrowing in dollars in each of the three years 2015, 2016, and 2017. (Do not round intermediate calculations.) |
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Fundamentals Of Multinational Finance
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
1st Edition
0201844842, 978-0201844849
