The Sunbelt Corporation has $35 million of bonds outstandingthat were issued at a coupon rate of 11.275 percent seven yearsago. Interest rates have fallen to 10.75 percent. Mr. Heath, theVice-President of Finance, does not expect rates to fall anyfurther. The bonds have 18 years left to maturity, and Mr. Heathwould like to refund the bonds with a new issue of equal amountalso having 18 years to maturity. The Sunbelt Corporation has a taxrate of 36 percent. The underwriting cost on the old issue was 2.2percent of the total bond value. The underwriting cost on the newissue will be 1.2 percent of the total bond value. The originalbond indenture contained a five-year protection against a call,with a call premium of 7 percent starting in the sixth year andscheduled to decline by one-half percent each year thereafter(consider the bond to be seven years old for purposes of computingthe premium). Use Appendix D for an approximate answer butcalculate your final answer using the formula and financialcalculator methods. Assume the discount rate is equal to theaftertax cost of new debt rounded up to the nearest whole percent(e.g. 4.06 percent should be rounded up to 5 percent). a. Computethe discount rate. (Do not round intermediate calculations. Inputyour answer as a percent rounded up to the nearest whole percent.)b. Calculate the present value of total outflows. (Do not roundintermediate calculations and round your answer to 2 decimalplaces.) c. Calculate the present value of total inflows. (Do notround intermediate calculations and round your answer to 2 decimalplaces.) d. Calculate the net present value. (Negative amountshould be indicated by a minus sign. Do not round intermediatecalculations and round your answer to 2 decimal places.) e. Shouldthe Sunbelt Corporation refund the old issue? Yes No