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

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