The Bowman Corporation has an $$22$ million bond obligation outstanding that it is considering refunding. Though the bonds were initially issued at $11$ percent, the interest rates on similar issues have declined to $9\mathrm{.}7$ percent. The bonds were originally issued for $20$ years and have $10$ years remaining. The new issue would be for $10$ years. There is a $7$ percent call premium on the old issue. The underwriting cost on the new $$22,000,000$ issue is $$520,000,$ and the underwriting cost on the old issue was $$410,000.$ The company is in a $35$ percent tax bracket, and it will use an $11$ percent discount rate to analyze the refunding decision. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Calculate the present value of total outflows.

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

Calculate the present value of total inflows.

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

Calculate the net present value.

Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to $2$ decimal places.

Should the old issue be refunded with new debt?

multiple choice

Yes

No