Calculate the npv of the bond refunding

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The City of Oxford issued $5 million of 8% coupon, 30-year, semiannual payment, tax-exempt municipal bonds 10 years ago. At time of issue, the bonds had 10 years of call protection. Now however, the bonds can be called if the city chooses to do so. The call premium is 6% of the face value. New 20-year, 5%, semiannual payment bonds ($5 million) can be sold at par, but flotation costs on this new issue would be 1.5%.Tax rate = 0%. Initial cost of refunding is $375,000. Calculate the NPV of the bond refunding.

$75,000

$1,733.607.90

$1,882,708.13

$1,507,708.13

None of the above

Reference no: EM131495594

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