20.11 An outstanding issue of Public Express Airlines debentures has a call provision attached.

The total principal value of the bonds is $250 million, and the bonds pay an annual coupon of $80 for each $1,000 of face value. The total cost of refunding would be 12 percent of the principal amount raised. The appropriate tax rate for the company is 35 percent. How low does the borrowing cost of Public Express need to drop to justify refunding with a new bond issue?