Why option B's market price adds " 100 pvifa 7%, 8)", and what is the step for 100 pvifa 7%, 8)

SeasideI-Iotelhas outstanding a 10% honissue withByears leftto mmty.1'hehondshnve efacevalue ofl, pay interestannnally,andhnveaprovisionmtwiaowthemtobecaodwimaprenum ofperbondfl'he company is considering two options. DptinnA:Cdlmhondsandreplaoemmwinew'i:couponbonsalsowithyearstomamty'hermwlinmrl no transactions oosts.These bonds willsellat per. DpDnB:Repurchasepresentbondsmleopenmnrkotandreplaoeaemwimmmenewiseue.Thepumhasemmei openmarketreeultsinalransnconumtofonepucenlofthemarketpoe. Shmdthemrepurchaseorcallmhonds? A. l[Sell the bonds B. Repurchase the bonds C. Neither. as they have the same cost Answer A OptimA: Theeootperbondofrecajng=facevalue+premium = $1m+ $50 =slnso porbond DptinnB: 'Ibgureoutneoootofrepurchasingthebonds,weneedtoknow13markotprioe.5inee?% oouponbondswillsellat par,1emarket rate ofinterestis T'a