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This is all one question. I had to copy/paste screenshots, sorry. McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 85,000,000 at a time
This is all one question. I had to copy/paste screenshots, sorry.
McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 85,000,000 at a time when the exchange rate is $1.3449/. The entire principal is to be repaid in three years, and interest is 6.550% per annum, paid annually in euros. The euro is expected to depreciate vis--vis the dollar at 3.4% per annum. What is the effective cost of this loan for McDougan? Complete the following table to calculate the dollar cost of the euro-denominated debt for years 0 through 3 . Enter a positive number for a cash inflow and negative for a cash outflow. (Round the amount to the nearest whole number and the exchange rate to four decimal places.) \begin{tabular}{lcccc} & Year 0 & Year 1 & Year 2 & Year 3 \\ \hline Proceeds from borrowing euros & & 85,000,000 & \\ Interest payment due in euros & & & \\ Repayment of principal in year 3 & & & \\ Total cash flow of euro-denominated debt & & & \\ \cline { 2 - 3 } & \end{tabular} Expected exchange rate, $/ 1.3449 Dollar equivalent of euro-denominated cash flow $Step by Step Solution
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