Question: mcdougan associates us mcdougan associates a usbased investment partnership borrows...

McDougan Associates​ (U.S.). McDougan​ Associates, a​ U.S.-based investment​ partnership, borrows €85,000,000 at a time when the exchange rate is $1.3395​/€. 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​ vis-à-vis the dollar at 3.3​% 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.)

	Year 0	Year 1	Year 2	Year 3
Proceeds from borrowing euros	€ 85,000,000
Interest payment due in euros		€	€	€
Repayment of principal in year 3				-85,000,000
Total cash flow of euro-dominated debt	€	€	€	€
Expected exchange rate, $/€	1.3395
Dollar equivalent of euro-denominated	$	$	$	$
cash flow