Consider yourself the CFO of Tough Nut Corp. Management is considering whether the company should refund its $864,000, 18.00% coupon, 10-year bond issue that was sold at par 3 years ago. The flotation cost on this issue was $4, 320 that has been amortizing on a straight-line basis over the 10-year original life of the issue. Tough Nut Corp. has a tax rate of 40%, and current short-term rates are 6%. You have collected the following data about the existing bond and the potential new bond issue: The associate financial analyst on the finance team has done some preliminary refunding analysis and submitted the following calculations to you. Consider this as step 1 in the refunding analysis. Assume that the company pays no additional interest on the old issue and earns no interest on short-term investments. Check if the calculations that the financial analyst submitted are correct and match your analysis. Check each box that has a correct value. If a value is incorrect, do not check the corresponding box. For tax purposes, the flotation cost must be amortized over the life of the new bond, which is 8 years. Thus, the after-tax saving every year for the next 8 years will be Tough Nut Corp., however, will no longer receive a tax deduction on the flotation cost on the old issue and will thus lose an after-tax benefit of The net amortization tax effect on the flotation cost is the difference between the old and the new issue, which is per year for the next years. If the company issues new bonds, the tax savings from amortizing the flotation costs will The annual coupon payments on the old bonds were $155, 520. Thus, the after-tax interest on the old issue is The after-tax interest on the new bonds is Thus, the net annual interest savings after tax will be At the final stage of the refunding analysis, you need to calculate the net present values (NPV_s) of the savings and 5ts and the NPV of the entire refunding operation