Swissie Debt Costs.The chapter demonstrated that a firm borrowing in a foreign currency could potentially end up paying a very different effective rate of interest than what it expected. Using the same baseline values of a debt principal of

CHF1.2

million, a one-year period, an initial spot rate of

CHF1.7000

= $1.00, a

4.74%

cost of debt, and a

35%

tax rate, what is the effective cost of debt for one year for a U.S. dollar-based company if the exchange rate at the end of the period was:

a.

CHF1.7000

= $1.00?

b.

CHF1.6450

= $1.00?

c.

CHF1.5470

= $1.00?

d.

CHF1.8610

= $1.00?