GST, Inc Refunding Analysis (15th edition) The financial manager of GST, Inc. is reviewing a possible bond refunding. Five years ago, GST issued $40,000,000 of 11% 25-year debt with semiannual coupon payments. The issue is currently callable with an 11% call premium. Flotation costs on that issue were 6%. The CFO believes that the firm could issue 20-year debt today with a coupon rate of 8% at par. The firm now has more experience with new debt issues and estimates that flotation costs on the new issue to be 4%. GSTs federal-plus-state tax rate is 40%. Evaluate this refunding. Should the firm refund?