Please answer all of question 1

F. So what is the difference in the total cash payments between keeping the old bond until maturity and the cash flows if we refund the bonds? G. Now compute these: a. The difference between the cash interest payment each period for the original bonds and the newly issued bonds. Is this a savings or more cost? b. What would be the present value of the difference in the cash interest payments? c. What is the difference in the maturity amounts between the original bonds and the newly issued bonds? Is this a savings or more cost? d. What is the present value of the difference in the maturity amounts? e. What is the difference between the present value you found in 10b. and 10d.? What is this difference likely due to? H. So is there any real economic gain or loss from early redemption of debt? How do we find the gain or loss on early extinguishment of debt? Does this remind you of other gains or losses that were/ computed this semester? So how should these gains and losses be interpreted? What concept drives why we have the gain or loss? 1. NOW consider this: What is the difference between the total interest EXPENSE (not the cash flows) left on the old bonds and the total interest expense for the new bonds? (this is not discounted) a. Discuss this difference in relation to any apparent gain or loss you computed in \#5 and \#9...is there really a savings from the cefunding???? b. Would this difference be recorded under GAAP