Station GmbH is a German all-equity firm which is about to issue a new 10-year, 17 per cent bond with interest paid annually. The debt issue of €10 million is to fund an expansion of the firm’s activities into Switzerland. Flotation costs are 0.8 per cent of gross proceeds, amortized over the life of the bond using 20 per cent reducing balances. Station’s tax rate is 33 per cent and the bond will not increase the risk of financial distress. You believe that the company may be better off issuing the bond in Switzerland (rather than Germany) to raise visibility of the company among its new customer base. You estimate that a Swiss bond issue will increase cash flows by €200,000 per annum over 10 years from additional Swiss revenues. However, flotation costs are 1.2 per cent in Switzerland. What is the net present value of the loan if it is made in Germany? Is a Swiss bond issue a better decision? Explain.