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Calculate the dollar cost of the euro-denominated debt

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Question - McDougan Associates, a U.S.-based investment partnership, borrows €75,000,000 at a time when the exchange rate is $1.3477/€. 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-à-vis the dollar at 2.7?% per annum. What is the effective cost of this loan for McDougan?

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.

Reference no: EM132921802

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