(7 Marks) Alpha Inc has bonds outstanding. Interest rates have fallen since the bonds were...
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(7 Marks) Alpha Inc has bonds outstanding. Interest rates have fallen since the bonds were issued. You, as the CFO, have been tasked to analyze whether or not these old bonds should be refinanced or not. Using the information below, determine whether or not the bonds should be refunded. Face Value of Bonds Outstanding = Coupon Rate on Current Bonds = Coupon Rate on New Bonds = Years Until Maturity = Corporate Tax Rate = Underwriting Costs on New Issue = Call Premium on Current Bonds = Coupon Frequency - $25,000,000 10.00% 9.00% 20 Years 25.00% 2.00% of Face Value 6.00% of Face Value Annual
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