Years Ago, the City of Melrose Issued $3,000,000 of 8

question 2

Multiple Choice

years ago, the City of Melrose issued $3,000,000 of 8% coupon, 30-year, semiannual payment, tax-exempt muni bonds The bonds had 10 years of call protection, but now the bonds can be called if the city chooses to do so The call premium would be 6% of the face amount New 20-year, 6%, semiannual payment bonds can be sold at par, but flotation costs on this issue would be 2% 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.

• A) $453,443
• B) $476,115
• C) $499,921
• D) $524,917
• E) $551,163

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Definitions:

Specific Performance

A legal remedy where a court orders a party to perform their exact obligations under a contract rather than awarding monetary damages for a breach.

Rare Books

Books that are considered valuable due to their age, scarcity, historical significance, or unique characteristics.

Child Abuse

Physical, emotional, or sexual harm inflicted on a child, including neglect or exploitation.

Injunction

A court order requiring an individual or entity to do or cease doing a specific action.