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

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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

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