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QUESTION 25 The current exchange rate is $1.40 = 1.00. The inflation rate in the...

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QUESTION 25 The current exchange rate is $1.40 = 1.00. The inflation rate in the U.S. is 1 percent and the inflation rate in the euro zone 3 percent. The appropriate cost of capital for a U.S.-based firm to evaluate a domestic project is 7 percent. What is the euro zone cost of capital for this project? Please type your answer as a decimal (four decimal places), for example 3.21% would be entered as 0.0321 [NOT THE CORRECT ANSWER]

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