The present value of the decrease in coupon payments

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Reference no: EM131975145

Huron Investments issues $4 million in 13.000% bonds maturing April 27, 2042. The bond is callable April 27, 2022 at a call premium of 3.750%.

April 27, 2022 the prevailing yield is 6.750%. If Huron Investments calls the entire issue and replaces it with 6.750% bonds also maturing April 27, 2042 then

Each semi-annual coupon payment will decrease by ________

The present value of the decrease in coupon payments is ________

The principal repayment at maturity will increase by ________

The present value of the increase in the principal repayment is ________

The present value of this decision to the company - to the nearest dollar - is ________

The company should (CALL / NOT CALL) the bond.

Reference no: EM131975145

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