A corporation has the option to prepay (call) a bond with 4 years to maturity, $50M in remaining principal, a 10% yearly rate, fixed and yearly payments. It can replace this bond with a 4 year bond with the same remaining payment structure, and a new rate of 8%. Prepayment penalties are quoted as a fraction of outstanding principal. How low must the prepayment penalty be to justify calling the old bond (ignoring the option value of waiting to refi)?

In the previous example, what is the new payment if the prepayment penalty is financed (folded into the new bond)?