ABC WasteABC Waste (ABCW) Is Considering Refunding a $50,000,000, Annual

Multiple Choice

ABC WasteABC Waste (ABCW) 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 8.4% would be required to retire the old bonds, and flotation costs on the new issue would amount to $3 million. ABCW's marginal tax rate is 40%. The new bonds would be issued when the old bonds are called.
-Refer to Scenario: ABC Waste.What is the NPV if ABCW refunds its bonds today?

A) $1,746,987
B) $1,838,933
C) $1,935,719
D) $2,037,599