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Business, 12.05.2021 03:30 heavendavis101

Suppose the following conditions prevail: U. S. Germany corporate income tax rate 21% 32% corporate bond yields 4% 3% and the expected rate of euro appreciation against the dollar is 2%/year. From the perspective of a U. S. corporation with a German branch, identify the following costs of debt (in dollar terms): i) The after-tax cost of dollar debt issued in the U. S.;
ii) The expected after-tax cost of euro debt issued in the U. S.;
iii) The expected after-tax cost of euro debt issued in Frankfurt.

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