Step 2

1. 190.80, 254.40, 212.00

2. 249.60, 192.00, 212.00, 153.60

3.1. 12.00, 26.00, 20.00, 16.00

3.2. 13, 8, 3, 10

3.3. Decrease/increase

Step 3

1. 149,760, 92,160, 69,120, 115,200

2. 69,120, 82,944, 96,768, 62,208

3. 55,296, 50,688, 46080, 59904

Step 4

1. 237.02, 142.21, 248.87, 118.51

2. 491,467.50, 273037.50, 327,645.00, 436,860.00

3. 213,720.01, 178,100.01, 274,156.01, -94,937.49

11. Refunding analysis Aa Aa Consider yourself the CFO of ToughNut Corp. Management is considering whether the company $960,000, 20.00% $4,800 that has been has a tax rate of 40%, and current short-term rates are 6%. coupon, 10-year bond issue that was sold at par 3 years ago. The flotation cost on this issue was amortizing on a straight-line basis over the 10-year original life of the issue. ToughNut Corp. You have collected the following data about the existing bond and the potential new bond issue: Data Collected Existing Bond $960,000 $4,800 10 New Bond $960,000 $4,240 Capital Flotation cost Maturity Years since issue Coupon Call premium After-tax cost of new debt 0 12.00% 20.00% 16.00% 7.20% The associate financial analyst on the finance team has done some preliminary refunding analysis and submitted the following calculations to you. Consider this as step 1 in the refunding analysis. Assume that the company pays no additional interest on the old issue and earns no interest on short-term investments Check if the calculations that the financial analyst submitted are correct and match your analysis. Check each box that has a correct value. If a value is incorrect, do not check the corresponding box. 11 Determining the initial investment outlay