(Solution) - Caterpillar Inc management is trying to decide between selling -(2025 Original AI-Free Solution)

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Caterpillar, Inc. management is trying to decide between selling a new bond issue in the U.S. or the Eurodollar bond market. In either market the bonds will be denominated in dollars and will have a three-year maturity. The domestic bonds will have a coupon rate of 4.1 percent and sell at a market price of $1,034.25. The Eurobonds will have a coupon rate of 4 percent and will sell at $1,029.76. Which bond issue will have the lowest cost to the firm?