New Hampshire Corp. has decided to issue three-year bonds denominated in 5,000,000 Russian rubles at par. The bonds have a coupon rate of 17%. If the ruble is expected to appreciate from its current level of $.03 to $.032, $.034, and $.035 in years 1, 2,and 3, respectively, what is the financing cost of these bonds?

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The financing cost is the yield to maturity, which is the internal rate of return on the bond. To calculate the yield to maturity, we need to find the present value of the bond's cash flows (coupon payments and principal repayment) and set it equal to the bond's price.The bond's cash flows are as follows:Year 1: Coupon payment of 5,000,000 rubles * 17% = 850,000 rublesYear 2: Coupon payment of 5,000,000 rubles * 17% = 850,000 rublesYear 3: Coupon payment of 5,000,000 rubles * 17% = 850,000 rublesYear 3: Principal repayment of 5,000,000 rublesThe bond's price is 5,000,000 rubles.Using a financial calculator, we can find that the yield to maturity is 23.39%.