20.12 Margret Kimberly, CFO of Charles River Associates, is considering whether or not to refinance the two currently outstanding corporate bonds of the firm. The first one is an 8-percent perpetual bond with a $1,000 face value with $75 million outstanding. The second one is a 9-percent perpetual bond with the same face value with $87.5 million outstanding. The call premiums for the two bonds are 8.5 percent and 9.5 percent of the face value, respectively. The transaction costs of the refundings are $10 million and

$12 million, respectively. The current interest rates for the two bonds are 7 percent and 7.25 percent, respectively. Which bond should Ms. Kimberly recommend be refinanced? What is the NPV of the refunding?