New York Waste (NYW) Is Considering Refunding a $50,000,000, Annual

question 21

Multiple Choice

New York Waste (NYW) is considering refunding a $50,000,000, annual payment, 14% coupon, 30-year bond issue that was issued 5 years ago. It has been amortizing $3 million of flotation costs on these bonds over their 30-year life. The company could sell a new issue of 25-year bonds at an annual interest rate of 11.67% in today's market. A call premium of 14% would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. NYW's marginal tax rate is 40%. The new bonds would be issued when the old bonds are called.
-What will the after-tax annual interest savings for NYW be if the refunding takes place?

• A) $664,050
• B) $699,000
• C) $768,900
• D) $845,790
• E) $930,369

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Definitions:

Counseling Process

A structured series of interventions and interactions aimed at assisting individuals, couples, or groups in coping with and resolving personal or psychological issues.

Ancillary Behaviors

Supplementary or additional behaviors that support the primary behavior or outcome being studied.

Interpersonal Manner

relates to the way individuals interact with each other, including their communication style, behaviors, and emotional expressions during interactions.

Microanalysis

A detailed examination or analysis of data or phenomena at a very small or specific scale.