TropiKana Inc., a U.S firm, has just borrowed euro 1,000,000 to make improvements to an Italian fruit plantation and processing plant. If the interest rate is 5.50% per year and the Euro appreciates against the dollar from $1.40/ at the time the loan was made to $1.45/ at the end of the first year, what is the before tax cost of capital if the firm repays the entire loan plus interest (rounded)? Explain your calculations.