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

The old $$50$ million bonds carry a coupon rate of $12\%,$ paid annually, and were issued $7$ years ago with $25$ years to maturity.

It has a call premium of $9\%$ above par value.

Current long$-$term rates are $10\%$ per annum and treasury bill rates are $5\%.$

Underwriting costs on the old issue amounted to $$200,000,$ 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 $25\%$ tax bracket.

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