5. Suppose the U.S. corporation will be financed 40% by issuing U.S. equity, 60% by issuing bonds in the U.S. The cost of equity financing is 8%.

a) What is the weighted average cost of capital if the firm uses $ debt, given the numbers in question 4? If it uses euro debt issued in the U.S.?

b) Should the U.S. corporation issue dollar debt, or euro debt? What factors influence its decision?