After Dan's external financing need analysis for East Coast Yachts, Larissa has decided to expand the company's operations. She has asked Dan to enlist an underwriter to help sell $52 million in new 25-year bonds to finance new construction. Dan has entered into discussions with Renata Harper, an underwriter from the firm of Crowe & Mallard, about which bond features East Coast Yachts should consider and also what coupon rate the issue will likely have. Although Dan is aware of bond features, he is uncertain as to the costs and benefits of some of them, so he isn't clear on how each feature would affect the coupon rate of the bond issue.

You are Renata's assistant, and she has asked you to prepare a report to Dan addressing the following:

1. Are investors really made whole with a make-whole call provision? Why or why not? If they are not, then how can this feature be modified so that investors are indeed made whole? Explain.

2. After considering all the relevant factors, would you recommend a zero-coupon issue or a regular coupon issue? Would you recommend an ordinary call feature or a make-whole call feature? Explain your justifications.