Transistor Group issued 25-year bonds 10 years ago at par, when the yield-to- maturity on the issue was 9.0 percent. Since then, the yield-to-maturity has declined to 7.0 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 issue and underwriting cost on the new $8 million issue is $300,000. The company is in a 40.0 tax bracket, and there will be an overlap period of 1 month. Treasury Bills currently yield 3.0 percent per year. [2] Transistor Group issued 25-year bonds 10 years ago at par, when the yield-to- maturity on the issue was 9.0 percent. Since then, the yield-to-maturity has declined to 7.0 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 issue and underwriting cost on the new $8 million issue is $300,000. The company is in a 40.0 tax bracket, and there will be an overlap period of 1 month. Treasury Bills currently yield 3.0 percent per year. [2]