M Company is considering refunding its preferred stock. The dividend rate on this stock is Rs $10,$ and it has a par value of Rs $100$ a share. The call price is Rs $105$ a share, and $100,000$ shares are outstanding. Rajesh Sharma, vice president of finance, feels the company can issue new preferred stock in the current market at a rate of $8$ percent. With this rate, the new issue could be sold at par; the total par value of the issue would be Rs $10$ million. Floatation costs of Rs $500,000$ are tax deductible, but the call premium is not tax deductible; the company's marginal tax rate is $30$ percent. A $60-$day period of overlap is expected between the time the new preferred stock is issued and the time the old preferred stock is retired. Should the company refund its preferred stock using a capital budgeting analysis of refunding?