management anticipate that interest rates will fall below 11% any time soon, but there is a chance that rates will increase. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadshests) Conduct a complete bond refunding analysis. What is the bond refunding's NPV? Do not round intermediate calculations. Round your answer to the nearest dollar. Refunding Analysis \begin{tabular}{l|r} Existing bond issue & $225,000,000 \\ \hline Coupon rate on existing bond issue & 13% \\ \hline Original maturity (in years) of existing bond issue & 30 \\ \hline Years since existing bond issue sold & 5 \\ \hline Original flotation cost on existing bond issue & $7,000,000 \\ \hline Call premium (\%) on existing bond issue & 7% \\ \hline New bond issue & $225,000,000 \\ \hline Coupon rate on new bond issue & 11% \\ \hline Maturity (in years) of new bond issue & $5 \\ \hline Flotation cost on new bond issue & $3,000,000 \\ \hline & 30% \\ \hline Tax rate & 7% \\ \hline Interest rate on short-term government securities & 1 \\ \hline Number of months new bonds issued before old bonds called & \end{tabular} Investment Outlay (After Taxes): Call premium on old bond issue Flotation cost on new bond issue Tax savings on old bond issue flotation cost expense Additional interest on old bond issue Interest earned on short-term government securities Total after-tax investment Annual Flotation Cost Tax Effects: Annual tax savings on new issue flotation costs Annual lost tax savings from old issue flotation costs Net flotation cost tax savings Annual Interest Savings Due to Refunding: Annual interest on old bond issue Annual interest on new bond issue Net interest savings Annual cash flows (flotation cost and interest savings) \#N/A NPV of bond refunding decision \#N/A management anticipate that interest rates will fall below 11% any time soon, but there is a chance that rates will increase. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadshests) Conduct a complete bond refunding analysis. What is the bond refunding's NPV? Do not round intermediate calculations. Round your answer to the nearest dollar. Refunding Analysis \begin{tabular}{l|r} Existing bond issue & $225,000,000 \\ \hline Coupon rate on existing bond issue & 13% \\ \hline Original maturity (in years) of existing bond issue & 30 \\ \hline Years since existing bond issue sold & 5 \\ \hline Original flotation cost on existing bond issue & $7,000,000 \\ \hline Call premium (\%) on existing bond issue & 7% \\ \hline New bond issue & $225,000,000 \\ \hline Coupon rate on new bond issue & 11% \\ \hline Maturity (in years) of new bond issue & $5 \\ \hline Flotation cost on new bond issue & $3,000,000 \\ \hline & 30% \\ \hline Tax rate & 7% \\ \hline Interest rate on short-term government securities & 1 \\ \hline Number of months new bonds issued before old bonds called & \end{tabular} Investment Outlay (After Taxes): Call premium on old bond issue Flotation cost on new bond issue Tax savings on old bond issue flotation cost expense Additional interest on old bond issue Interest earned on short-term government securities Total after-tax investment Annual Flotation Cost Tax Effects: Annual tax savings on new issue flotation costs Annual lost tax savings from old issue flotation costs Net flotation cost tax savings Annual Interest Savings Due to Refunding: Annual interest on old bond issue Annual interest on new bond issue Net interest savings Annual cash flows (flotation cost and interest savings) \#N/A NPV of bond refunding decision \#N/A
