Question 291 (Mandatory) (15 points) TECHNOTMERM CORPORATION was founded in 1972 by bringing together a skilled professional team established in the field of waste heat recovery. Technotherm just executed a 3 year contract with the State of Germany to deliver (10) Firetube Boilers to a state-owned entity. Each Boller Technotherm constructs can be buit in Belgium or Tulsa, OK. The cost of manulacturing is $2,750,000. The terms of the contract specily that Technotherm must accept payment for the Boilers in Euro, which isn't a problern because Technotherm maintains a multi-currency account in London and it holds plenty of 6 . It will take Technotherm 3 years to complete the construction and delivery of the Boilers. Technotherm's CFO looked up the conversion rates of 6/$ for today and in 3 years. The Spot 8/$ rate is 1.05476 and the 3yr Forward is 1.10757. Also, the CFO checked the 30-day and 90-day LIBOP rates, which are 4.22% and 4.73% respectively. Three year SWAP rates are 3.84\% for 30-day LIBOR and 4.83% for 90 day LIBOR. Technotherm must borrow finance the construction of the Boilers. The company has two financing options: USBANK: 1. 75% of the cost of manufacturing 2. Interest only per annum, paid in monthly payments 3. Rate Options: a. 30 DAY LIBOR +6% b. 10% FIXED FOR 3 YEARS DEUTCHE BANK: 1. 80% of the cost of manufacturing 2. Interest only per annum, paid in cuarterly payments 3. Rate Options: a. 90 DAY LIBOR +5% b. 9% FIXED FOR 3 YEARS 1. Assuming the cost of equity for Technotherm is 10% : What is the cost of equity in USD at the end of the period