The Wagner Corporation has a $$15$ 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 $8\mathrm{.}6$ percent. The bonds were originally issued for $20$

years and have $16$ years remaining. The new issue would be for $16$ years. There is a $7$ percent call premium on the old issue. The

underwriting cost on the new $$15$ million issue is $$500,000,$ and the underwriting cost on the old issue was $$350,000.$ The company is

in a $30$ percent tax bracket, and it will allow an overlap period of one month $(1/12$ of the year$).$ Treasury bills currently yield $5$ percent.

$($Do not round intermediate calculations. Enter the answers in whole dollars, not in millions. Round the final answers to nearest

whole dollar.$)$

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

Total outflows

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

Total inflows

c$.$ Calculate the net present value.

Net present value

d$.$ Should the old issue be refunded with new debt?

Yes

No