Response to the following questions:
1. Why is the all-in-cost of funds for an 8.125% coupon, 10-year Eurobond issue with a par value of $100 million and in which the proceeds to the issuer are $98,187,562 equal to 8.4%?
2. A financial manager is considering issuing a bond in the United States or in the Eurobond market. The manager has calculated that the all-in-cost of funds for a bond issued in the United States is 8.25% and 8.35% in the Eurobond market. In which market would the manager realize a lower all-in-cost of funds?