Bowman Corporation has an outstanding $24 million bond obligation, which it is considering repaying. Although the bonds were initially issued at 13 percent, interest rates on similar issues have dropped to 11.7 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 9 percent call premium over the previous issue. The subscription cost of the new issue of $24,000,000 is $540,000, and the subscription cost of the old issue was $430,000. The company is in a 35 percent tax bracket and will use a discount rate of 12 percent (rounded cost of debt after taxes) to analyze the repayment decision. Use Appendix D for an approximate answer,

a.	Calculate the present value of the total outputs. (Do not round intermediate calculations and round your answer to 2 decimal places.)

PV of total outputs

ps

b.	Calculate the present value of the total receipts. (Do not round intermediate calculations and round your answer to 2 decimal places.)

Total Ticket PV

ps

C.	Calculate the net present value. (Negative amount should be indicated with a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

net present value

ps

d.

Should the old issuance be repaid with new debt?

	Yeah
	No