Use formulas, show work and explain for full credit.

8) Suppose Wireless needs to borrow $1 million, and is considering issuing a 3-year dollar-denominated Eurobond worth $1 million, or a 3-year yen-denominated Foreigrn bond worth 1 10 million. The firm can issue the 3-year US dollar-denominated Eurobond at 99.5% of par value with a fixed annual coupon rate of 7%. Alternatively, the firm can issue the yen-denominated Foreign bond at par with a fixed annual coupon rate of 4% (yen terms). The current exchange rate is Yen 110 S. Expectations for the value of the Yen/S rate over the 3-year period are: Year 2 Year 3 Year 1 Today Yen 110 S Yen 108/S Yen 105 S Yen 100/S What is the yield to maturity on the dollar-denominated Eurobond (in US dollar terms)? What is the yield to maturity on the yen-denominated Foreign bond (in S terms)? Comparing these two costs (compare in S terms), which method of financing will Wireless choose? 8) Suppose Wireless needs to borrow $1 million, and is considering issuing a 3-year dollar-denominated Eurobond worth $1 million, or a 3-year yen-denominated Foreigrn bond worth 1 10 million. The firm can issue the 3-year US dollar-denominated Eurobond at 99.5% of par value with a fixed annual coupon rate of 7%. Alternatively, the firm can issue the yen-denominated Foreign bond at par with a fixed annual coupon rate of 4% (yen terms). The current exchange rate is Yen 110 S. Expectations for the value of the Yen/S rate over the 3-year period are: Year 2 Year 3 Year 1 Today Yen 110 S Yen 108/S Yen 105 S Yen 100/S What is the yield to maturity on the dollar-denominated Eurobond (in US dollar terms)? What is the yield to maturity on the yen-denominated Foreign bond (in S terms)? Comparing these two costs (compare in S terms), which method of financing will Wireless choose