On September 30, 2015, Ericson Company negotiated a two-year, 2,400,000 dudek loan from a foreign bank at an interest rate of 4 percent per year.
It makes interest payments annually on September 30 and will repay the principal on September 30, 2017.
Ericson prepares U.S.-dollar financial statements and has a December 31 year-end.
| September 30, 2015 |
$ |
0.130 |
|
| December 31, 2015 |
|
0.135 |
|
| September 30, 2016 |
|
0.150 |
|
| December 31, 2016 |
|
0.155 |
|
| September 30, 2017 |
|
0.180 |
|
Determine the effective cost of borrowing in dollars in each of the three years 2015, 2016, and 2017. (Do not round intermediate calculations.)