A firm is considering whether to issue the following securities:

i) a 7-year note at par with a coupon of 6.125% paid semi-annually and fees equal to .65% of par to be paid up front

ii) a 7-year zero coupon bond at a price of 65.5% of par with up front fees of .50% of par (the bond can be redeemed by the firm at par at any time)

iii. a 7-year Eurobond issued at 99.875% of par with an annual coupon of 6% and fees of .875% of par.

Fees reduce the proceeds to the issuer on the issuance date. Which financing alternative is best? Calculate borrowing costs and discuss other factors that might influence your decision (e.g. does the call feature of the zero coupon bond affect the decision?)