Consider yourself the CFO of ToughNut 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. ToughNut 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: Data Collected Capital Flotation cost Maturity Years since issue Coupon Call premium After-tax cost of new debt Existing Bond $864,000 $4,320 10 3 18.00% 14.40% New Bond $864,000 $3,816 8 0 10.80% 6.48%