The Harding Corporation has $$512$ million of bonds outstanding that were issued at a coupon rate of $12\mathrm{.}75$ percent seven years ago

Interest rates have fallen to $111$ percent. Preston Alter, the vice president of finance, does not expect rates to fall any further. The bonds

have $18$ years left to maturity, and Preston would like to refund the bonds with a new issue of equal amount also having $18$ years to

maturity. The Harding Corporation has a tax rate of $280$ percent. The underwriting cost on the old issue was $37$ percent of the total

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bond value. The underwriting cost on the new issue will be $1\mathrm{.}8$ percent of the total bond value. The original bond indenture contained

a five$-$year protection against a call with an $8$ percent call premium starting in the sixth year and scheduled to decline by one$-$half

References

percent each year thereafter $($Consider the bond to be seven years old for purposes of computing the premium$].$ Use Appendix D

a$.$ Compute the discount rate. $($Round the final answer to $2$ decimal places.$)$

Discount rate

$792\%$

b$.$ Calculate the present value of total outflows. $($Enter the answers in whole dollars, not in millions. Round $"$PV Factor" to $3$ decimal

places. Do not round intermediate calculations. Round the final answer to nearest whole dollar$)$

Total outflows

c$.$ Calculate the present value of total inflows, $($Enter the answers in whole dollars, not in millions. Round $"$PV Factor" to $3$ decimal

places. Do not round intermediate calculations. Round the final answer to nearest whole dollar$)$

Total Inflows

$

d$.$ Calculate the not present value. $($Enter the answers in whole dollars, not in millions, Round $"$PV Factor" to $3$ decimal places. Do

not round Intermediate calculations. Round the final answer to nearest whole dollar. Negative amount should be indicated by a

minus sign.$)$

Net present value