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Sambulea, Inc. needs to borrow C$10 million or the foreign currency equivalent for 5 years....

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Finance

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Sambulea, Inc. needs to borrow C$10 million or the foreign currency equivalent for 5 years. It can issue bonds in Canadian dollars with a coupon rate of 15% and must pay 1% issuance fee up-front. Alternatively, it may take a Swiss-franc-denominated loan from a Swiss bank with annual interest rate of 10% and without any other fee. The current exchange rate is C$0.7/Sfr and is expected to be C$0.75/Sfr at the end of the next year and to change at the same percentage rate for each of the remaining life of the 5-year loan. Which financing alternative do you recommend Sambules take based on the cost only

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