Suppose that on January 1, the cost of borrowing Australian dollars (AUD) for the year is 18%. During the year, U.S. inflation is 5%, and Australian inflation is 9%. At the same time, the exchange rate changes from AUD 1 = USD 0.15 on January 1 to AUD 1 = USD 0.10 on December 31. What was the nominal U.S. dollar cost of borrowing AUD for the year?

Question options:

a)negative 25.08%

b)positive 21.33%

c)positive 25.08%

d)negative 21.33%