The $5$unbelt Copporation has $$44$ milion of bonds ounstanding that were issued al a coupon late of $12175$ percenl seven years ago. Imerest lates have falient to H$.1\mathrm{.}50$ percent. Mr$.$ Hesth, the Vice.Fiesident of Firlance does not expect rates to fal any furtine. The burct have $18$ yeors left to maturry, and Mi Heath would the to refund the bonds wath a new issue of enual amburx a a $50$ having $18$ years $10$ maturtly The $5$ unbett Carporatian has a tax rate of $36$ percent. The underwrting cast on the old lssue was $3\mathrm{.}3$ percent of the toroi hond vaue. The inderwiting cost on the new issue will be $15$ percent of the total bord value. The onginal bond indenture concalned a five$-$year protection agalnst a coll, with a $8$ percent cal premium staruing in the sath year and scheduied to decine hy are$-$hair percent each year thereafter $($cons der the bond to be sewen years old for purpoces of computing the premiumi Use AppendtuD for ail apporoximate answer but calculate your final debt rounded up to the nearest whole percent leg. $4\mathrm{.}06$ percent should be rounded up to $5$ percerit$).$

a$.$ Compure the discoum rate

Note Do not round intermediate calculations. Input your answer as a percent rounded up to the nearest whole percerm.

$$

b$.$ Calcu ate the preserit value of toro periow

Note: Da not round Intermedlate calcuitetiong and round your ariswer to $2$ decimal places

Provibialeitcow $$

c$.$ Calculate the present value of tobal inflows.

Nate: Do hot round insermediste calculations and round your arswer to Z decimal ploces.

Wr$.$d total hitisw $$

d$.$ Caculate the net present value

Note: Negotlve amount should be indicated by a mimba slon. Do not round Intermedime chiciletions and round your enswer to $2$ decimel places.

Nsi prenem iain

AppendirIPreuent$32941288412$af an annity of St$.$ PV$4014\mathrm{.}7$I$8$cI$625090434257$

Problem $16-19($Algo$)$ Call premium $[$LO $16-3]$

The Sunbelt Corporation has $$44$ million of bonds outstanding that were Issued at a coupon rate of $12\mathrm{.}175$ percent seven years ago. Interest rates have fallen to $11\mathrm{.}50$ percent. Mr$.$ Heath, the Vice$-$President of Finance, does not expect rates to fall any further. The bonds have $18$ years left to maturity, and Mr$.$ Heath would like to refund the bonds with a new issue of equal amount also having $18$ years to maturity. The Sunbelt Corporation has a tax rate of $36$ percent. The underwriting cost on the old issue was $3\mathrm{.}3$ percent of the total bond value. The underwilting cost on the new issue will be $1\mathrm{.}5$ percent of the total bond value. The original bond indenture contained a five$-$year protection against a call, with a $8$ percent call premium starting In the sixth year and scheduled to decline by one$-$half percent each year thereafter $($consider the bond to be seven years old for purposes of computing the premlum$).$ Use Appendix Dor an approximate answer but calculate your final answer using the formula and financlal calculator methods. Assume the discount rate is equal to the aftertax cost of new debt rounded up to the nearest whole percent $($e$.$g$.4\mathrm{.}06$ percent should be rounded up to $5$ percent$).$

a$.$ Compute the discount rate.

Note: Do not round Intermedlate calculations. Input your answer as a percent rounded up to the nearest whole percent.

Discount rate $$

b$.$ Calculate the present value of total outflows.

Note: Do not round Intermedlate calculations and round your answer to $2$ decimal places.

PV of total outflows $$

$$

c$.$ Calculate the present value of total Inflows.

Note: Do not round Intermedlate calculations and round your answer to $2$ decimal places.

$$ PV of total inflows

d$.$ Calculate the net present value.

Note: Negetive amount should be indicated by a minus slgn$.$ Do not round Intermediate calculatlons and round your enswer to $2$ decimal places.