What is the effective cost of the loan for mcdougan

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Question: McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows €80,000,000 at a time when the exchange rate is $1.3460/€. The entire principal is to be repaid in three years, and interest is 6.250% per annum, paid annually in euros. The euro is expected to depreciate against the dollar at 3% per annum. What is the effective cost of this loan for McDougan?

Reference no: EM131677395

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