$($THB$)$ debt. The treasurer of EAC$-$Thailand is considering a $1-$year bank loan for USD$252,000.$ The current spot rate is THB$32\mathrm{.}03=$ USD$1\mathrm{.}00,$ and the dollar$-$based interest is $6\mathrm{.}71\%$ for the $1-$year period. $1-$year loans are $11\mathrm{.}97\%$ in baht.

a$.$ Assuming expected inflation rates for the coming year of $4\mathrm{.}1\%$ and $1\mathrm{.}25\%$ in Thailand and the United States, respectively, according to purchase power parity, what would be the effective cost of funds in Thai baht terms? baht terms?

c$.$ If EAC could borrow Thai baht at $13\mathrm{.}00\%$ per annum, would this be cheaper than either part $($a$)$ or part $($b$)?$

a$.$ Assuming expected inflation rates for the coming year of $4\mathrm{.}1\%$ and $1\mathrm{.}25\%$ in Thailand and the United States, respectively, according to purchase power parity, what would be the effective cost of funds in Thai baht terms?

The effective cost of funds, in baht terms, is

$6.($Round to three decimal places.$)$