Question: Problem 8 - 9 ( Algo ) Foreign borrowing [ LO 8 - 2 ] Gulliver Travel Agency thinks interest rates in Europe are low.

Problem 8-9(Algo) Foreign borrowing [LO8-2]
Gulliver Travel Agency thinks interest rates in Europe are low. The firm borrows euros at 12 percent for one year. During this time
period, the dollar falls 10 percent against the euro. What is the effective interest rate on the loan for one year? (Consider the 10 percent
fall in the value of the dollar as well as the interest payment.)
Note: Compute your answer from a U.S. perspective. Input your answer as a whole percent.
Problem 8-9(Algo) Foreign borrowing [LO8-2] Gulliver Travel Agency thinks interest rates

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