The Bowman Corporation has a bond obligation of $24 million outstanding, which it is considering refunding....

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The Bowman Corporation has a bond obligation of $24 millionoutstanding, which it is considering refunding. Though the bondswere initially issued at 13 percent, the interest rates on similarissues have declined to 11.7 percent. The bonds were originallyissued for 20 years and have 10 years remaining. The new issuewould be for 10 years. There is a call premium of 9 percent on theold issue. The underwriting cost on the new $24,000,000 issue is$540,000, and the underwriting cost on the old issue was $430,000.The company is in a 35 percent tax bracket, and it will use an 12percent discount rate (rounded aftertax cost of debt) to analyzethe refunding decision. Use Appendix D for an approximate answerbut calculate your final answer using the formula and financialcalculator methods.
a. Calculate the present value of totaloutflows.(Do not round intermediate calculations and roundyour answer to 2 decimal places.)


b. Calculate the present value of totalinflows.(Do not round intermediate calculations and roundyour answer to 2 decimal places.)


c. Calculate the net present value.(Negative amount should be indicated by a minus sign. Donot round intermediate calculations and round your answer to 2decimal places.)

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The Bowman Corporation has a bond obligation of $24 millionoutstanding, which it is considering refunding. Though the bondswere initially issued at 13 percent, the interest rates on similarissues have declined to 11.7 percent. The bonds were originallyissued for 20 years and have 10 years remaining. The new issuewould be for 10 years. There is a call premium of 9 percent on theold issue. The underwriting cost on the new $24,000,000 issue is$540,000, and the underwriting cost on the old issue was $430,000.The company is in a 35 percent tax bracket, and it will use an 12percent discount rate (rounded aftertax cost of debt) to analyzethe refunding decision. Use Appendix D for an approximate answerbut calculate your final answer using the formula and financialcalculator methods.a. Calculate the present value of totaloutflows.(Do not round intermediate calculations and roundyour answer to 2 decimal places.) b. Calculate the present value of totalinflows.(Do not round intermediate calculations and roundyour answer to 2 decimal places.) c. Calculate the net present value.(Negative amount should be indicated by a minus sign. Donot round intermediate calculations and round your answer to 2decimal places.)