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The following scenario contains all the information you need to answer the questions - use what's here, do not include additional analysis from the case

The following scenario contains all the information you need to answer the questions - use what's here, do not include additional analysis from the case or elsewhere.

Your company has $10,000,000 in "excess cash" - more than you need to provide a cushion on your balance sheet to protect against risk. Jane, your crack financial analyst, has prepared a set of options for you to consider. They are:

B) You have $10m in non-amortizing bonds outstanding, with 15 years left, 12% annual interest coupon, and the total principal repayment due at the end of the term. Your bondholders have offered to sell the bond back to you at par value. Assume a tax rate of 35%.

At the same cost of capital of 20%, what is the value of option Bto current shareholders?

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