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Transistor Group issued 20-year bonds 8 years ago at par, when the yield-to-maturity on the...

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Transistor Group issued 20-year bonds 8 years ago at par, when the yield-to-maturity on the issue was 10.0 percent. Since then, the yield-to-maturity has decined to 9.0 and the company is considering refunding the $8 million outstanding. They would replace it with an issue of equal size, for the number of years remaining of the original issue. The company would have to pay a cal premium of 6.0 percent on the old issue and underwriting cost on the new $8 milion issue is $300,000. The company is in a 40.0 percent tax bracket, and there will be an overlap period of 1 month. Treasury Bils currently yield 3.0 percent per year. [1] Required: Compute the Net Present Value of the refund decision and answer the question on whether or not the bond should be refunded. Enter the discount rate with two decimal places. (eg. 12.34%) Round all cash flow numbers to zero decimal places. Enter cash outflows as negative numbers. Enter Net numbers for each cash flow (egenter underwriting costs net of tax)

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