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If Alliant Can Issue a $110 Million 20-Year Refunding Bond

Question 18

Multiple Choice

If Alliant can issue a $110 million 20-year refunding bond at 7.45% and call an older $110 million issue with 20 years to maturity that had a coupon of 8.80%, what is the present value of the interest savings? Assume a 40% tax rate.


A) $11,620,259
B) $17,820,000
C) $ 9,117,935
D) $29,561,100

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