Transistor group issued 20 year bonds 8 year ago at par, when the yeild to maturity on the issue was 10.0 percent. Since then the yeild to maturity has declined to 9.0 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 6.0 percent on the old underwriting cost on the new $ 8 million issue $ 300, 000 degrees . The company is 400 tax bracket , and there will be an overlap period of 1 month . Treasury Bills currently yield 3.0 percent per year .

Paragraph BI U Required: A. Enter the discounted present value for each of the relevant cash flows in the table below: Enter the discount rate with two decimal places. (e.g. 12.34%) 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 costs net of tax.) Discount rate used: Call premium Interest savings Underwriting costs (net) Overlap period (net) Net Present Value erast savings Underwriting costs (net) Overlap period (net) Net Present Value Use the following space to provide information in support of your calcu (add space by hitting the enter key) ... then move on to the next question. B. Should the corporation refund the bond? Alitan now in the Enlleu