New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14% coupon, 30-year bond issue...

New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67% in today's market. A call premium of 14% would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. NYW's marginal tax rate is 40%. The new bonds would be issued when the old bonds are called. What is the NPV if NYW refunds its bonds today? Group of answer choices $2,241,359 $2,037,599 $1,935,719 $1,746,987 $1,838,933

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jeff jeffy answered 1 year ago

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