TRUE Inc. is considering whether or not to refund an existing bond issue. Old bond...
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TRUE Inc. is considering whether or not to refund an existing bond issue.
Old bond issue:
Principal: $ 20 million
Annual Interest rate: 12%
Remaining maturity: 5 years
New bond issue:
Principal: $20 million
Annual interest rate: 9%
Underwriting cost: 2.5%
Call premium: 6%
Tax rate= 30%
Determine the NPV of this decision.
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