The Bowman Corporation has a 21 million bond obligation outstanding, which it is considering refunding. Though the bonds were initially issued at 10 percent, the interest rates on similar issues have declined to 9.5 percent. The bonds were originally issued for 20 years and have 10 years remaining. The new issue would be for 10 years. There is an 8 percent call premium on the old issue. The underwriting cost on the new 21,000,000 dollasr issue is 560,000 dollars, and the underwriting cost on the old issue was 410,000 dollars. The company is in a 30 percent tax bracket, and it will use a 9 percent discount rate (rounded after tax cost of debt) to analyze the refunding decision. Use appendix D.

a) Calculate the present value of total outflows. (Round Pv factor to 3 decimal places, intermediate and final answer to the nearest dollar amount.)

b) Calculate the present value of total inflows. (Round PV Factor to 3 decimal places, intermediate and final answer to the nearest dollar amount.)

c) Calculate the net present value.(Round PV Factor to 3 decimal places, intermediate and final answer to the nearest dollar amount. Negative amount should be indicated by a minus sign.)

d) Should the old issue be refunded with new debt?