McDougan Associates? (U.S.). McDougan? Associates, a? U.S.based investment? partnership, borrows
euro€85,000,000 at a time when the exchange rate is ?$1.3304?/euro€. The entire principal is to be repaid in three? years, and interest is 6.350?% per? annum, paid annually in euros. The euro is expected to depreciate? visàvis the dollar at 3.1?% per annum. What is the effective cost of this loan for? McDougan?
Complete the following table to calculate the dollar cost of the? eurodenominated 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 eurodenominated debt 
€ 
€ 
€ 
€ 

Expected exchange rate, $/€ 
1.3304 

Dollar equivalent of eurodenominated cash flow 
$ 
$ 
$ 
$ 
What is the effective cost of this loan for? McDougan?
McDOUGAN ASSOCIATES (U.S): 
Year 0 
Year 1 
Year 2 
Year 3 

Proceeds from borrowing euros 
€85,000,000 

Interest payment due in euros 
€(5,397,500) 
€(5,397,500) 
€(5,397,500) 

Repayment of principal in year 3 
€(85,000,000) 

Total cash flow of eurodenominated debt 
€(5,397,500) 
€(5,397,500) 
€(90,397,500) 

Expected exchange rate , $/€ 
1.3304 
1.2892 
1.2492 
1.2105 
Dollar equivalent of euro denominated cash flow 
$113,084,000 
$(6,958,457) 
$(6,742,557) 
$(109,426,174) 
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