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Charles River Associates is considering refunding its perpetual bond issue. The coupon rate on the outstanding issue of $100,000,000 is 7.50%, the Call Premium is

Charles River Associates is considering refunding its perpetual bond issue. The coupon rate on the outstanding issue of $100,000,000 is 7.50%, the Call Premium is 5% and the transaction cost of refunding is $9,000,000. Assume the call premium is tax deductible. The current YTM on these types of bonds is 6.50% and the firms tax rate is 35%. What is the NPV of refunding this bond issue? (round to the nearest dollar)

$6,284,615

$4,776,487

$1,000,000

$3,384,615

$3,134,615

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