If Consolidated Corporation issues a Eurobond denominated in yen, the 7% interest rate on the $1 million, one-year borrowing will be 2% less than rates in the United States. However, ConCorp would have to pay back the principal and interest in Japanese yen. Currently, the exchange rate is ¥183 = $1. By how much could the yen rise against the dollar before the Euroyen bond would lose its advantage to ConCorp?
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