Five years ago, the IBM issued $2,000,000,000 of 7% coupon, 20-year annual payment bonds. The bonds had 5 years of call protection, but now IBM can call the bonds if it chooses to do so. The call premium would be 5% of the face amount. Today 15-year, 5%, annual payment bonds can be sold at par, but flotation costs on this issue would be $2 million. The flotation cost of the original issue was $1.5 million. Tax Rate is 30% a) What is the net present value of the refunding? b) What is the breakeven interest rate, the rate below which it would be profitable to call the bonds