Duke Inc., a US firm, wants to raise USD1,000,000 by issuing a 2-year Japanese yen (JPY) denominated Eurobond in New York, at a 10% coupon rate. The current spot exchange rate is JPY105/USD, and the 1-year and 2-year forward exchange rates are JPY107/USD and JPY109/USD, respectively. The annualized cost (i.e. IRR) of the Eurobond to the firm is closest to:

Group of answer choices

7.96%

8.18%

8.69%

9.03%