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Roo-Fus Inc. wants to expand its operations internationally by selling its kangaroobased dog food in new European markets. Roo-Fus is subject to a 35 corporate
Roo-Fus Inc. wants to expand its operations internationally by selling its kangaroobased dog food in new European markets. Roo-Fus is subject to a \35 corporate tax rate and is considering issuing a bond to finance its expansions. It is facing two options: It can issue a 10-year, \\$100 million bond, denominated in Euro and with an interest rate of \\( \\mathbf{9 \\%} \\) p.a. Alternatively, it can issue a 10-year, \\$100 million bond, denominated in Dollars and carrying an interest rate of \7 p.a. If the Euro is forecast to appreciate by \1.5 annually, what is the expected after-tax dollar cost of the Euro-denominated bond? a. \7.44 b. \8.61 c. \10.64 d. \13.83 e. \7.26
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