Show step by step solution please Madison Manufacturing is contemplating offering a new $95 million bond issue to replace an outstanding $95 million bond issue. The firm wishes to do this to take advantage of the decline in interest rates that has occurred since the initial bond issuance. The old and new bonds are described in what follows. The firm is in the 35 per cent tax bracket. Old bonds: The outstanding bonds have a $1,000 par value and an 8.5 per cent coupon interest rate. They were issued five years ago with a 20year maturity. They were initially sold for their par value of $1,000, and the firm incurred $340,000 in floatation costs. They are callable at $1,060. New bonds: The new bonds would have a $1,000 par value, a 6 per cent coupon interest rate, and a 15year maturity. They could be sold at their par value. The floatation cost of the new bonds would be $350,000. The firm does expects to have two month of overlapping interest. a. Calculate the aftertax cost of the call premium that is required to retire the old bonds. b. Calculate the tax savings that are expected from the unamortised portion of the old bonds flotation cost. c. Determine the initial investment that is required to call the old bonds and issue the new bonds. d. Calculate the annual tax savings from the flotation cost of the new bonds, assuming the 15 year amortisation. e. Calculate the annual cash flow savings, if any, that are expected from the proposed bond refunding decision. f. Find the net present value (NPV) of the bondrefunding decision. Would you recommend the proposed refunding? Show your calculations clearly and explain your answer.