Question: McDougan Associates, a U . S . - based investment partnership, borrows euro 8 5 , 0 0 0 , 0 0 0 at a

McDougan Associates, a U.S.-based investment partnership, borrows euro 85,000,000 at a time when the exchange rate is $1.3381/euro. The entire principal is to be repaid in three years, and interest is 6.850% per annum, paid annually in euros. The euro is expected to depreciate vis--vis the dollar at 3.5% per annum. What is the effective cost of this loan for McDougan?
McDougan Associates (USA). McDougan Associates, a U.S.-based investment partnership, borrows 85,000,000 at a time when the exchange rate is $1.3381. The entire principal is to be repaid in
three years, and interest is 6.850% per annum, paid annually in euros. The euro is expected to depreciate vis--vis the dollar at 3.5% per annum. What is the effective cost of this loan for McDougan?
Complete the following table to 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. (Round the amount to the nearest whole number and the exchange rate to four decimal places.)
 McDougan Associates, a U.S.-based investment partnership, borrows euro 85,000,000 at a

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