Question 8 (1 point) Three years ago, North West Water (NWW) issued $25,000,000 face value of 20-year bonds carrying a 8% (annual payment) coupon. The company is now considering refunding these bonds. It has been amortizing $4 million of flotation costs on these bonds over their 20-year life. The company could sell a new issue of 17-year bonds at an annual interest rate of 6% in today's market. A call premium of 6.5% would be required to retire the old bonds, and flotation costs on the new issue would amount to $2 million. Its marginal tax rate is 40%. The new bonds would be issued when the old bonds are called What will the after-tax annual interest savings for the company be if the refunding takes place? 1) $300,000 2) $364,050 3) $468,900 4) $330,369 5) $445,790