Wal$-$Mart needs to raise $$100$ million and is trying to decide between a domestic dollar bond issue and a foreign bond issue, each with a $5-$year maturity. The U$.$S$.$ bond can be issued at a coupon of $3\mathrm{.}50\%,$ paid semiannually, with underwriting and other expenses totaling $1\mathrm{.}0\%$ of the issue size, whereas the foreign bond would cost only $0\mathrm{.}75\%$ to issue but would bear an annual coupon of $4\mathrm{.}25\%.$ What is the YTM on each bond type and which bond would you choose?

$$ None of these answers are correct

$$ domestic bond is $1\mathrm{.}861\%$; foreign bond is $2\mathrm{.}285\%,$ so choose the domestic bond

$$ domestic bond is $1\mathrm{.}861\%$; foreign bond is $2\mathrm{.}285\%,$ so choose the foreign bond

$$ domestic bond is $3\mathrm{.}756\%$; foreign bond is $2\mathrm{.}285\%,$ so choose the foreign bond

$$ domestic bond is $3\mathrm{.}756\%$; foreign bond is $2\mathrm{.}285\%,$ so choose the domestic bond