Body The Bowman Corporation has a bond obligation of $22 million outstanding, which it is considering refunding. Though the bonds were Initially issued at 11 percent, the interest rates on similar issues have declined to 9.7 percent. The bonds were originally issued for 20 years and have 10 years remaining. The new issue would be for 10 years. There is a 7 percent call premium on the old issue. The underwriting cost on the new $22.000,000 issue is $520,000, and the underwriting cost on the old issue was $410,000. The company Isina 35 percent tax bracket, and it will use an 11 percent discount rate to analyze the refunding decision. Use Appendix D for an approximate answer but calculate your finat answer using the formula and financial calculator methods. a. Calculate the present value of total outflows. (Do not round intermediate calculations and round your answer to 2 decimal places) cer randon Mer WER b. Calculate the present value of total inflows. (Do not round Intermediate calculations and round your answer to 2 decimal places.) These c. Calculate the net present value. (Negative amount should be indicated by a minus sign. Do not round Intermediate calculations and round your answer to 2 decimal places.) Not present value d. Should the old issue be refunded with new debt? Yos No AppendleD Present value of an annuity of S1, PV PV,A1- 018 Percent M ME NO BE 16 12 1 47 0.962 1.6 0917 7 0.935 1806 2624 0.93 2 11% 0901 1 713 2.444 1102 3.696 2775 1.709 2.531 1240 3.890 4 17 5 3630 4452 5.242 5002 5.733 7,435 0.943 1.833 2673 3.465 4212 4917 SA 6210 6.802 7360 7.87 4100 4767 SED 5.971 4231 0.00 1970 2.041 1902 4153 5.795 6728 7,652 1.500 SAT1 103 11.2015 12.154 13004 10 1418 15 562 3 0.900 1.942 2.884 3.500 4713 5.601 5.472 7325 3.162 1903 0787 10 575 11340 12.100 12.40 13570 14.202 98 LEOS SESS 0.920 1.763 2.57% 3:32 3.993 4623 5206 5742 6247 0.710 2.130 . 7.500 0244 1.690 2.402 2017 3.000 4111 4564 4.960 320 5650 4712 5.146 5537 651 10 0900 5,236 2.487 3.170 30791 155 456 5335 5.759 616 6495 6010 7.10 2367 7000 7,024 W.023 201 365 10 11 7.094 7400 0.971 1.913 2.829 3717 4500 5.417 5230 7020 7.286 1530 9253 954 10.635 1296 11 938 12.561 13166 13.756 14124 14877 11413 19.600 23115 25730 600 COES ACAS 5% 0952 1859 2.723 1546 4329 5075 1,750 5465 7.100 7722 100 3.63 194 9.09 100 10.30 11:274 11.690 12.05 12.462 14.01 15372 17.159 18 255 VE 6.492 0.750 6982 10 6420 6620 14 15 16 17 3.760 9305 9.96 10.563 11.118 11.652 12.166 12.659 13134 13:00 15622 17.292 1993 31482 7.10 5095 6418 006 7.161 7417 2.780 ROS 313 8.544 1.750 3.950 8120 23 10 274 10.757 10.952 105) 9.295 9.712 10.100 10.477 10.12 11.150 11.490 1270 13765 15.046 15.762 9:22 9372 0.004 19 20 20 30 40 SO 05 11740 10 946) 9.763 10 050 10330 10.94 11654 12.400 1312 3001 17:26 1040 2021 250 22035 3000 BER 15.670 10301 103 22306 7,20 2549 7.709 7,019 2063 1422 8694 8051 9042 24 7120 7,200 300 2,489 7.10 1056 M4 2304 10525 11250 11.925 12233 9077 427 3729 995 31434 Appendix D (concluded) Present value of an annuity of $1 17 Period 1 2 a 4 16% 0.862 1.805 2.246 2.798 3274 3.685 4039 50% 0.667 1.111 1.407 1.605 1.737 5 7 3 1024 9 13 0.885 1668 2361 2.974 3517 3998 4.423 4799 5.132 5.430 5.667 SSTE 6122 6:302 5.462 0.004 6229 340 6.900 T 025 7330 19 14% 0.877 1647 2.322 2.914 3.433 3.889 4.288 4.639 4.946 5216 5453 5600 5.142 6002 5.142 6.265 6373 6467 550 5.623 6a3 7003 7.105 7133 41 12 13 15% 0.870 1626 2.283 2.855 3352 3.784 4.160 4.487 4.772 5.019 5.234 5.421 5583 5724 5.847 5.954 5.047 6.128 6.198 6.259 5.464 6.566 6642 6.661 20% 0.833 1.528 2106 2589 2.991 3.326 3.605 3837 4031 4 192 4.327 4 439 4533 0.855 1585 2210 2.743 3.199 3589 3.922 4.207 4.451 4.659 4.836 4.988 5.118 5.229 5324 5.405 5.475 5.534 5.584 5.628 5.766 5829 5.871 5.880 0.847 1.566 2174 2600 3122 3.490 3812 4078 4303 4,494 4.656 4.793 4.910 5.000 5092 S. 162 5.222 5.273 5316 5.353 5.467 5.517 5543 5.554 Percent 19%. 0.840 1.547 2.140 2639 3058 3.410 3.706 3954 4.163 4339 4486 4611 4715 4802 4.876 4938 4988 5.033 5070 5.101 5.195 5.235 5258 5.262 4,607 4.833 5.029 5.197 5.342 5.463 5575 5.668 5749 5.818 5.672 5.929 6097 6177 6233 6245 25 0.800 1.440 1.952 2362 2689 2951 3.161 3329 3.463 3571 3656 3725 3.780 3824 3.859 3.887 2.910 3.928 3942 3.954 3985 1995 3.099 4000 30% 0.769 1361 1816 2 166 2.436 2643 2.802 2.925 3.019 3.092 3.147 3.190 3.223 3.249 3.268 3.283 3.295 3.300 2311 2316 3329 2.332 a 333 3333 35% 0.741 1 289 1.596 1997 2.220 2.385 2.50 2.598 2.665 2.715 2.752 2.779 2799 2.814 2825 2.834 2.840 2.844 2.840 2.850 2.856 2.857 2852 2.857 40% 0.714 1.224 1.589 1.849 2035 2.168 2.263 2331 2.379 2.414 2.438 2.456 2.469 2470 2484 2489 2.492 2494 2.496 2497 2.499 2500 2.500 2.500 4511 16 1.883 1922 1.948 1.965 1.977 1.995 1990 t.93 1.095 1.997 1.998 1999 1.999 1.999 2.000 2.000 2.000 2000 4.675 4.750 4.775 4812 4.843 4.870 4.94 18 10 20 25 30 4979 7.63 7.57 3 4.997 4.999
