g decided to issue three-year bonds denominated in 5 million Russian rubles at par. The bonds have a coupon rate of 17 percent. If the ruble is expected to appreciate from its current level of

Assuming that the bonds are sold at par (no discount or premium), the annual coupon payments should be:

year 1 = 850,000 rubles, equal to $27,200

year 2 = 850,000 rubles, equal to $28,900

year 3 = 850,000 rubles, equal to $29,750

plus the face value of 5,000,000 rubles equal to $175,000

The company received 5,000,000 rubles today equal to $150,000

using an excel spreadsheet:

-150,000

27,200

28,900

204,750

and the IRR function, the cost of financing is 23.39%

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