Question: The floatation cost, the initial maturity, and the number of years remaining to maturity are shown in the following table for a number of bonds.

The floatation cost, the initial maturity, and the number of years remaining to maturity are shown in the following table for a number of bonds. The firm is in the 40% tax bracket.

a. Calculate the annual amortization of the floatation cost for each bond.
b. Determine the tax savings, if any, expected to result from the unamortized floatation cost of each bond if it were called today.

Floatatiorn Cost $250,000 500,000 125,000 750,000 650,000 Initial MaturitV Years Remaining to Maturity 22 years Bond of Bond 30 years 15 20 10 15 10

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