Question: I will give a thumps up for correct working for the correct answers given. The Arjoon Corporation CFO, Mr. Ray Arjoon, is considering whether to

I will give a thumps up for correct working for the correct answers given.

The Arjoon Corporation CFO, Mr. Ray Arjoon, is considering whether to refund the two currently outstanding perpetual bonds of the firm. You have gathered the following information on the two bonds: Bond A $135M perpetual debt $1000 par value 6% coupon rate call premium 7.5% of face value Flotation costs $12.5M Bond B $142M perpetual debt $1000 par value 7% coupon rate call premium 8.5% of face value Flotation costs $14M YTM 5.25% YTM 6.1% Which if either bond should Mr. Arjoon recommend be refunded? The corporate tax rate is 40% NPV (bond A) = $1,220,873 Refund NPV (bond B) = -$85,154 Do not refund

The Arjoon Corporation CFO, Mr. Ray Arjoon, is considering whether to refund the two currently outstanding perpetual bonds of the firm. You have gathered the following information on the Which if either bond should Mr. Arjoon recommend be refunded? The corporate tax rate is 40% NPV (bond A) =$1,220,873 Refund NPV ( bond B) =$85,154 Do not refund

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