Daedulus Wings has had several successful years in the airline business and had received recognition from many quarters for flying higher , further and cheaper than the competition . Its financial state of affairs has not been as successful . The new vice - president of finance is reviewing some debentures that carry fairly high Semiannual payments . The vice president notes in particular a bond issue that was issued & years ago with 15 years to Maturity at all annual rate of 12 percent , payable semiannually . It has a call provision at a premium of 8 percent above par value . The bond issue has $50 Million outstanding . Current long - term interest rates are 7 . 5 percent , payable on a semiannual basis and Short - term rates are 3 percent . If the old bonds are called the vice - president will require a 15 - day overlap period . Wings has a tax rate of 35 percent . Underwriting* and other financing expenses will be $ 1 million . Should the old issue be refunded and replaced with a debt issue with a comparable* Maturity ? Show all calculations