Vix Co$.($of the U$.$S$.)$ presently serves as a distributor of products by purchasing them from other

U$.$S$.$ firms and selling them in Europe. It wants to purchase a manufacturer in Thailand that

could produce similar products at a low cost $($due to low labor costs in Thailand$)$ and export the

products to Europe. The operating expenses would be denominated in Thai currency $($the baht$).$

The products would be invoiced in euros. If Vix Co$.$ can acquire a manufacturer, it will

discontinue its existing distributor business. If Vix Co$.$ purchases a company in Thailand, it

expects that its revenue might not be sufficient to cover its operating expenses during the first $5$

years. It will need to borrow funds for a $5-$year term to ensure that it has enough funds to pay all

of its operating expenses in Thailand. It can borrow funds denominated in U$.$S$.$ dollars, in Thai

baht, or in euros and will need $$10,000,000$ today. Within the next $5$ years, Baht is expected to

depreciate by $2\%$ annually, and Euro is expected to appreciate by $1\mathrm{.}5\%$ annually. Assuming

those exchange rate expectations and borrowing costs below, which currency should it borrow?

$($Loan principal will be paid at maturity$)$

Interest rate Spot Exchange Rate $($USD$)$

USD $5\%1$

Baht $6\%0\mathrm{.}8$

Euro $3\%1\mathrm{.}05$

show it in excel