Transistor Group issued $20-$year bonds $8$ years ago at par, when the yield$-$to$-$maturity on the issue was $10\mathrm{.}0$ percent. Since then, the yield$-$to$-$maturity has declined to $9\mathrm{.}0$ and the company is considering refunding the $$8$ million outstanding. They would replace it with an issue of equal size, for the number of years remaining of the original issue.

The company would have to pay a call premium of $6\mathrm{.}0$ percent on the old issue and underwriting cost on the new $$8$ million issue is $$300,000.$ The company is in a $40\mathrm{.}0$ percent tax bracket, and there will be an overlap period of $1$ month. Treasury Bills currently yield $3\mathrm{.}0$ percent per year.

$[1]$

Required:

Compute the Net Present Value of the refund decision and answer the question on whether or not the bond should be refunded.

Enter the discount rate with two decimal places. $($e$.$g$.12\mathrm{.}34\%)$

Round all cash flow numbers to zero decimal places.

Enter cash outflows as negative numbers.

Enter 'Net' numbers for each cash flow $($e$.$g enter underwriting cosis net of tax$).$

Discount rate

Outilows

Payment on call provision

Borrowing expenses of new issue

Underwriting Cost of New Issue

Amortization of Costs

Annual Tax Savings

Present Value of Future Tax Savings

Net Underwriting Cost of New Issue

Net outflow

$\backslash$table$[[$Inflows$,],[$Cost savings attributed to lower rate:,$],[$Annual interest cost of old bond,$],[$Annual interest cost on new bond,$],[$Annual Interest Savings per year,$],[$Annual After$-$tax Savings Per Year,$],[$Present Value of Annual Interest Savings,$],[$Interest Paid During Overlap Period,$],[$Net Interest Earned During Overlap Period,$],[$Net Overlapp Period Cost,$],[$Total Inflow,$],[$Inflow lese nutflnw INat Present Valuel,$]]$