Question: Problem 5 Charles River Associates Refinancing (RWJJ 8th Ed, Ch. 20, Q8) Charles River Associates is considering whether to refinance either of the two perpetual

Problem 5 Charles River Associates Refinancing (RWJJ 8th Ed, Ch. 20,

Problem 5 Charles River Associates Refinancing (RWJJ 8th Ed, Ch. 20, Q8) Charles River Associates is considering whether to refinance either of the two perpetual bond issues the company currently has outstanding. Here is information about the two bond issues: The corporate tax rate is 35 percent. What is the NPV of the refunding for each bond? Which bond should the company refinance? (Assume the call premium is tax deductible.) (Note book said tax rate was 40 percent. We will run with 35 percent)

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