41 The Hachi Corporation of bossing that were Interest rates the talento 12 percent. Preston Alles, the president of have 18 years of tomatityand Preston would like to read the bonds with maturity. The Harding Corporation has a tavole of 30 percent. The underwriting cond on the bond value. The underwriting cont on the new sue will be 18 percent of the total bond the a live your protection against a call with a percent coll premium starting in the with you and to dete percent each year thereafter consider the bond to be seven years old for purposes of computing the phone a. Compute the discount rate. Formula 1x (1) Round the final anwwer to 2 decimal places Discount rate M b. Calculate the present value of total outflows. (Enter the answers in whole dollers, not in million pound" to see places. Do not round Intermediate calculations. Round the final answer to nenes 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 net 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 minus sign.) Net present value $ e. Should the Harding Corporation refund the old issue? e. Should the Harding Corporation refund the old issue? O NO O Yes 41 The Harding Corporation has $51.3 million of bonds outstanding that were issued at a coupon rate of percent ven years ago Interest rates have fallen to 12 percent. Preston Aller, the vice-president of finance, does not expectates to follany further. The bonds have 18 years left to maturity, and Preston would like to refund the bonds with a new iwe of equal amount o hwng 18 years to maturily. The Harding Corporation has a tax rate of 30 percent. The underwilling cost on the old I was a percent of the total bond value. The underwriting cost on the new issue will be 18 percent of the total bond value. The original bond identite contained a five year protection against a call, with an 8 percent call premium starting in the sixth year and scheduled to decine by one hall percent each year thereafter (Consider the bond to be seven years old for purposes of computing the premium). we do a. Compute the discount rate. Formula 1 x (1) (Round the final answer to 2 decimal places.) Discount rate b. Calculate the present value of total outflows. (Enter the answers in whole dollars, not in milions. Round "PU 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 net present value. (Enter the answers in whole dollars, notin 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 $ e. Should the Harding Corporation refund the old issue? O No