Which type of bond should sambuka issue

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Reference no: EM13281358

Sambuka, Inc. can issue bonds in either U.S. dollars or in Swiss francs. Dollar-denominated bonds would have a coupon rate of 12 percent; Swiss franc-denominated bonds would have a coupon rate of 10 percent. Assuming that Sambuka can issue bonds worth $10,000,000 in either currency, that the current exchange rate of the Swiss franc is $.70, and that the forecasted exchange rate of the franc in each of the next three years is $.75, what is the annual cost of financing for the franc-denominated bonds? Which type of bond should Sambuka issue?

Reference no: EM13281358

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