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The Robinson Corporation has $36 million of bonds outstanding that were issued at a coupon rate of 11.850 percent seven years ago Interest rates have

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The Robinson Corporation has $36 million of bonds outstanding that were issued at a coupon rate of 11.850 percent seven years ago Interest rates have fallen to 11.250 percent. Mr. Brooks, the Vice-President of Finance, does not expect rates to fall any further. The years to maturity. The Robinson Corporation has a tax rate of 30 percent. The underwriting cost on the old issue was 3.60 percent of the total bond value. The underwriting cost on the new Issue will be 230 percent of the total bond value. The original bond Indenture contained a five-year protection against a call, with a 6 percent call premium starting in the sixth year and scheduled to decline by one-half porcent each year thereafter. Consider the bond to be seven years old for purposes of computing the premium.) Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Assume the discount rate is equal to the aftertax cost of new debt rounded up to the nearest whole percent (e.g. 4.06 percent should be rounded up to 5 percent). a. Compute the discount rate. (Do not round Intermediate calculations. Input your answer as a percent rounded up to the nearest whole percent) Discount rate b. Calculate the present value of total outflows. (Do not found intermediate calculations and round your answer to 2 decimal places.) PV of total outflows c. Calculate the present lue of total inflows. Do not round Intermediate calculations and round your answer to 2 decimal places) b. Calculate the present value of total outflows. (Do not round Intermediate calculations and round your answer to 2 decimal places.) PV of total outflows c. Calculate the present value of total inflows. (Do not round intermediate calculations and round your answer to 2 decimal places.) PV of total inflows d. Calculate the net present value. (Negative amount should be indicated by a minus sign. Do not round Intermediate calculations and round your answer to 2 decimal places.) Net present value

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