Prairie Dog Inc Assume That the Average Annual Exchange Rate Was Equal to an Annual

Essay

Prairie Dog Inc. borrowed US$10,000,000 on January 1, 2017 at an annual rate of 8%. The loan is due December 31, 2020 and interest is payable annually each December 31. The exchange rates on selected dates throughout the life of the loan are shown below:
$\begin{array}{|l|l|}\hline \text { Tanuary } 1,2017 & \text { CDN \$1.4415 } \\\hline \text { December } 31,2017 & \text { CDN } \$ 1.4325 \\\hline \text { December } 31,2018 & \text { CDN } \$ 1.4575 \\\hline \text { December } 31,2019 & \text { CDN \$1.4435 } \\\hline \text { December } 31,2020 & \text { CDN } \$ 1.4525 \\\hline\end{array}$ Assume that the average annual exchange rate was equal to the December 31^st spot rates.
Calculate the exchange gains or losses that would be reported in the net income of the company for each year over the life of the loan.