For this and the next 3 question. New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14.5% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67% in today's market. A call premium of 14% would be required to retire the old bonds, and flotation costs on the new issue would be $3 million. The company's marginal tax rate is 40%. The new bonds would be issued when the old bonds are called. Calculate the initial cost of the refunding?

Question 7 options: Option 2 is incorrect

1)	$5,049,939

2)	$5,315,725

3)	$5,595,500

4)	$5,890,000

5)	$6,200,000

What is the net present value of the refunding? Note that cities pay no income taxes. Hence, taxes are not relevant in this analysis.

Question 6 options: Option 2 is incorrect

1)

$453,443

2)

$476,115

3)

$499,921

4)	$3,586,059

5)

$240,000

6)

$551,163