Waste Deep Disposal Services Is Considering Refunding a $525,000,000 Bond

question 1

Multiple Choice

Waste Deep Disposal Services is considering refunding a $525,000,000 bond issue. The old bonds have a 7.25% coupon rate. The new bonds will have a 6% coupon rate. Both issues will be outstanding for about four weeks. What is the overlapping interest if the company is in the 38% tax bracket (rounded) ?

• A) $1,517,465
• B) $1,815,288
• C) $1,357,642
• D) $1,225,427

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