Question: Problem 16-18 Refunding decision [LO16-3] The RobinsonCorporation has $29 million of bonds outst... Problem 16-18Refunding decision [LO16-3] The Robinson Corporation has $29million of bonds outstanding that were issued at a coupon rate of11.150 percent seven years ago. Interest rates have fallen to10.650 percent. Mr. Brooks, the Vice-President of Finance, does notexpect rates to fall any further. The bonds have 17 years left tomaturity, and Mr. Brooks would like to refund the bonds with a newissue of equal amount also having 17 years to maturity. TheRobinson Corporation has a tax rate of 30 percent. The underwritingcost on the old issue was 2.90 percent of the total bond value. Theunderwriting cost on the new issue will be 1.90 percent of thetotal bond value. The original bond indenture contained a five-yearprotection against a call, with a call premium of 7 percentstarting in the sixth year and scheduled to decline by one-halfpercent each year thereafter. (Consider the bond to be seven yearsold for purposes of computing the premium.) Use Appendix D for anapproximate answer but calculate your final answer using theformula and financial calculator methods. Assume the discount rateis equal to the aftertax cost of new debt rounded up to the nearestwhole percent (e.g. 4.06 percent should be rounded up to 5 percent)a. Compute the discount rate. (Do not round intermediatecalculations. Input your answer as a percent rounded up to thenearest whole percent.) b. Calculate the present value of totaloutflows. (Do not round intermediate calculations and round youranswer to 2 decimal places.) c. Calculate the present value oftotal inflows. (Do not round intermediate calculations and roundyour answer to 2 decimal places.) d. Calculate the net presentvalue. (Negative amount should be indicated by a minus sign. Do notround intermediate calculations and round your answer to 2 decimalplaces.)