Question $3$

McDougan Associates, a U$.$S$.-$based investment partnership, borrows $3,120,359$ at a time

when the exchange rate is $$1\mathrm{.}3460=1\mathrm{.}00.$ The entire principal is to be repaid in three years,

and interest is $6\mathrm{.}250\%$ per annum, paid annually in euros. The euro is expected to depreciate

vis$--$vis the dollar at $3\%$ per annum. What is the effective cost of this loan for McDougan?

Note: do not round intermediate steps. Round the final answer to two decimal places and

enter as percentage, e$.$g$.,5\mathrm{.}47$