Transistor Group issued $20-$year bonds $8$ years ago at par, when the yield$-$to$-$maturity on the issue was $10\mathrm{.}0$ percent. Since then, the yield$-$to$-$maturity has declined to $9\mathrm{.}0$ and the company is considering refunding the $$8$ million outstanding. They would replace it with an issue of equal size, for the number of years remaining of the original issue.

The company would have to pay a call premium of $6\mathrm{.}0$ percent on the old issue and underwriting cost on the new $$8$ million issue is $$300,000.$ The company is in a $40\mathrm{.}0$ percent tax bracket, and there will be an overlap period of $1$ month. Treasury Bills currently yield $3\mathrm{.}0$ percent per year.

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Required:

Compute the Net Present Value of the refund decision and answer the question on whether or not the bond should be refunded.