11. Refunding analysis Aa Aa Consider yourself the OFO of ToughNut Corp. Management is considering whether the company should refund its $744,000, 15.50% coupon, 10-year bond issue that was sold at par 3 years ago. The flotation cost on this issue was $3,720 thet has been amortizing on a straight-line basis over the 10-year original life of the issue. ToughNut Corp. has a tax rate of 35%, and current short-term rates are 6%, Ycu have collected the following data about the existing band and the potential new bond issue: Data Collected Existing Bond $744,000 $3,720 10 New Bond $744,000 $3,286 Capital Flotation cost Maturity Years since issue Coupon Call premium After-tax cost of new debt 15.50% 9.30% 12.40% 6.05% The associate financial analyst on the finance team has done some preliminaryr following calculations to you. Consider this as step 1 in the refunding analysis. additional interest on the old issue and earns no interest on short-term investments. analysis and submitted the e that the company pays no Check if the calculations that the financial analyst submitted are correct and match your analysis. Check each box that has a correct value. If a value is incorrect, do not check the corresponding box. Step 1: Determining the initial investment outlay Schedule of Cash Flows Before Tax After Tax Check if Correct Investment Outlay Call premium on the old bond Flotation cost on new issue Immediate tax savings on old flotation cost expense -$92,256 $59,966 $3,286 $3,286 $2,604$911 Total after-tax investment -$62,341 Based on the information given to you, solve for step 2 (annual flotation cost tax effects) and step 3 (annual interest savings) by completing the following steps in the refunding anal MacBook A