Raid Gauloises. Raid Gauloises is a rapidly growing French sporting goods and adventure racing outfitter. The company has decided to borrow euro 22 comma 000 comma 000

22,000,000 via a euro-euro floating rate loan for four years. Raid must decide between two competing loan offers from two of its banks.

Banque de Paris has offered the four-year debt at euro-LIBORplus

+2 %

2% with an up-front initiation fee of 1.800 %

1.800%. Banque de Sorbonne, however, has offered euro-LIBORplus

+2.5 %

2.5% a higher spread, but with no loan initiation fees up-front, for the same term and principal. Both banks reset the interest rate at the end of each year.

Euro-LIBOR is currently 3.950 %

3.950%. Raid's economist forecasts that LIBOR will rise by 0.500

0.500 percentage points each year. Banque de Sorbonne, however, officially forecasts euro-LIBOR to begin trending upward at the rate of 0.250

0.250 percentage points per year. Raid Gauloises's cost of capital is 11 %

11%. Which loan proposal do you recommend for Raid Gauloises?

For the Banque de Paris loan, the cash flow for Year 0 is euro

For the Banque de Paris loan, the cash flow for Year 1 is euro

For the Banque de Paris loan, the cash flow for Year 2 is euro

For the Banque de Paris loan, the cash flow for Year 3 is euro

nothing

. (Round to the nearest euro.)

For the Banque de Paris loan, the cash flow for Year 4 is euro