GBA Inc. wishes to raise $100,000,000 by issuing a 10 Year Eurobond. The treasurer of GBA is working with an investment bank to arrange the issue.

The treasurer compiled yield curve and exchange rate data to see if it would be worthwhile to issue the bond in JPY denomination and hedge the interest and principal payments using forward contracts.

Time to maturity	US (%)	Japan (%)
1	5.05	0
2	4.89	0.04
3	4.61	0.06
4	4.44	0.07
5	4.27	0.08
6	4.22	0.24
7	4.16	0.41
8	4.07	0.53
9	4.03	0.59
10	3.98	0.65

Currently, USD/JPY spot rates is 136.30. The JPY bond can be issued at 1% coupon rate, and will incur the same issue costs as the EUR-denominated bonds; bonds will be in JPY 100,000 nominal value and will sell at par value. The cost of issuing bonds will be 1.75% of the gross amount raised which is the equivalent of USD 100,000,000 at the current spot rate.

a) How much is the principle and net fund?

b) what is the coupon payments?

c) Estimated the AIC JPY bonds

d) Estimate the AIC JPY bonds in USD terms

e) Estimated the credit Spread

f) Calculate the annual percentage transaction cost

Please submit the solution in an excel sheet