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A Company has a $ 6 1 , 5 0 0 , 0 0 0 bond issue outstanding that has a 0 . 1 1
A Company has a $ bond issue outstanding that has a annual coupon interest rate and years remaining to maturity. This issue, which was sold years ago, had flotation costs of $ that the firm has been amortizing on a straightline basis over the year original life of the issue. The bond has a call provision that makes it possible for the company to retire the issue at this time by calling the bonds in at a call premium. Investment banks have assured the company that it could sell an additional $ worth of new year bonds at an interest rate of To ensure that the funds required to pay off the old debt will be available, the new bonds will be sold month before the old issue is called; thus, for month the company will have to pay interest on two issues. Current shortterm interest rates are Predictions are that longterm interest rates are unlikely to fall below Flotation costs on a new refunding issue will amount to $ and the firm's marginal federalplusstate tax rate is Enter the NPV if the firm refunds it's debt.
NOTE: Enter your answer to the nearest dollar amount, rounded up with no dollar sign. If your answer is $ enter
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