The Bowman Corporation has an $ 10 million bond obligation outstanding that it is considering refunding. Though the bonds were initially issued at 11 percent, the interest rates on similar issues have declined to $10.0 percent. The bonds were originally issued for 20 years and have 10 years remaining. The new issue would be for 10 years. There is a 7 percent call premium on the old issue. The underwriting cost on the new $ 10,000,000 issue is $ 400,000, and the underwriting cost on the old issue was $ 290,000. The company is in a 35 percent tax bracket, and it will use an 9 percent discount rate to analyze the refunding decision. Use Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. Calculate the present value of total outflows.

Note: Do not round intermediate calculations and round your answer to 2 decimal places.

PV of total outflows__________


b. Calculate the present value of total inflows.

Note: Do not round intermediate calculations and round your answer to 2 decimal places.

PV of total outflows_________


c. Calculate the net present value.

Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.

Net present value_______