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Yankee, a US firm, needs to raise USD1 billion or equivalent to acquire Broncon, an Australian firm. Therefore, Yankee firm is trying to decide between
Yankee, a US firm, needs to raise USD1 billion or equivalent to acquire Broncon, an Australian firm. Therefore, Yankee firm is trying to decide between the following three types of bond issues.
Assuming all else is equal, which is the least expensive bond issue solely based on All-in cost for Yankee firm? Please show your full workings. [Hint: Compare the annualized yield to maturity (YTM) for each bond issue. Use the possible internal rate of return given above to speed up your calculation.]
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