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Tropikana Inc., a U.S firm, has just borrowed 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate

Tropikana Inc., a U.S firm, has just borrowed 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate in is 5.50% per year and the Euro depreciates against the dollar from $1.40/ at the time the loan was made to $1.35/ at the end of the first year, what is Tropikana's cost of debt in U.S. dollars in the first year?

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