Question: Copper Mountain Group (USA). The Copper Mountain Group, a private equity firm headquartered in Boulder, Colorado (U.S.), borrows £5,000,000 for one year at 7.375% interest.
a. What is the dollar cost of this debt if the pound depreciates from $2.0260/£ to $1.9460/£ over the year?
b. What is the dollar cost of this debt if the pound appreciates from $2.0260/£ to $2.1640/£ over the year?