Mullet Technologies is considering whether or not to refund a $75 million, 12 percent coupon, 30 year bond issue that was sold 5 years ago. It is amortizing $5 million of flotation costs on the 12 percent bonds over the issue's 30-year life. Mullet's investment bankers have indicated that the company could sell a new 25-year issue at an interest rate of 10 percent in today's market. Neither they nor Mullet's management anticipate that interest rates will fall below 10 percent any time soon, but there is a chance that interest rates will increase. call premium of 12 percent would be required to retire the old bonds, and flotation costs on the new issue would amount to $5 million. Mullet's marginal ederal-plus-state tax rate is 40 percent. The new bonds would be issued 1 month before the old bonds are called, with the proceeds being invested in short- erm government securities returning 6 percent annually during the interim period. Current bond issue information Par value $75,000,000 coupon rate 12% original maturity 30 emaining maturity 25 original flotation costs $5,000,000 Call premium 12% Tax rate 40% New issue information Coupon rate 10.0000% maturity 25 lotation costs $5,000,000 Time between issuing new bonds and calling old bonds (months) 1 Rate earned on proceeds of new bonds before calling old bonds (annual) 6% a. Perform a complete bond refunding analysis. What is the bond refunding's NPV