Gobin Ltd$.$ is considering whether to repay its old bonds with a new bond issue.

The old $$40$ million bonds carry a coupon rate of $10\%,$ paid annually, and were issued $8$ years ago with $30$ years to maturity.

It has a call premium of $12\%$ above par value.

Current long$-$term rates are $8\%$ per annum and treasury bill rates are $4\%.$

Underwriting costs on the old issue amounted to $$300,000$ however their underwriter has advised that there would be a $50\%$ increase in their fee for the current issue.

It is expected that there will be an overlap period of one month.

The company is in the $35\%$ tax bracket.

Required: Advise Gobin Ltd$.$ on whether they should refund the issue and why.