2. Mirha Corp has $40 million of outstanding bonds. The bonds have a $1,000 par value and a 10% coupon rate. They were issued 5 years ago, with 25 years of original maturity, and flotation cost of $200,000. The firm could call these bonds at a 10% call premium. The firm has an opportunity to issue $40 million of bonds with maturity of 20 years and a 7.5% interest rate. The new bonds would require flotation costs of $250,000. To ensure that the funds are available for the refunding, the firm plans to issue the new bonds 3-months before retiring the old bonds. If short-term interest rates are 3%, annually, what is the NPV of the refunding operation? Assume the company is in the 25% tax bracket