H&D is a U.S. multinational company with the following debt and equity components in its consolidated capital section. The company's cost of equity is 18% (Note that company has debt in two different currencies)

Assumptions Value

Tax Rate 30.00%

Debt-1: Euro8,000,000, 10-year 6% coupon Euro Bonds issued in Euros selling at par

Debt-2: Pound 4,000,000 20 year 8% coupon Pound denominated Bonds selling at par

Spot Rate EUR/USD 1.15

1 year Forward Rate EUR/USD 1.25

Spot Rate GBP/USD 1.75

1 Year Forward Rate GBP/USD 1.65

Common Stock $40,000,000

Retained Earnings $5,000,000

a. what is the current value of the 10 year bond?

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