Details of this Paper

FIN - Jowens Inc. issued $1,000,000 of 5% coupon

Description

solution


Question

Question;Jowens Inc. issued $1,000,000 of 5% coupon, 30-year, semiannual payment, tax-exempt muni bonds 5 years ago. The bonds had 5 years of call protection, but now the bonds can be called if the city chooses to do so. The call premium would be 4% of the face amount. New 20-year, 4%, semiannual payment bonds can be sold at par, but flotation costs on this issue would be 1% of the amount of bonds sold. What is the net present value of the refunding? Note that cities pay no income taxes, hence taxes are not relevant.

 

Paper#48165 | Written in 18-Jul-2015

Price : $19
SiteLock