Caterpillar, Inc. management is trying to decide between selling a new bond issue in the U.S. or

Question:

Caterpillar, Inc. management is trying to decide between selling a new bond issue in the U.S. or the Eurodollar bond market. In either market the bonds will be denominated in dollars and will have a three-year maturity. The domestic bonds will have a coupon rate of 4.1 percent and sell at a market price of $1,034.25. The Eurobonds will have a coupon rate of 4 percent and will sell at $1,029.76. Which bond issue will have the lowest cost to the firm?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Eurobonds
A Eurobond is a debt instrument that's denominated in a currency other than the home currency of the country or market in which it is issued. Eurobonds are frequently grouped together by the currency in which they are denominated, such as eurodollar...