Refer to Exhibit 18.1 start data below. What is the required after-tax refunding investment outlay, i.e., the cash outlay at the time of the refunding? a. $5,049,939 b. $5,315,725 c. $5,595,500 d. $5,890,000 e. $6,200,000

Amount: $50,000,000 Call premium %: 14% Old rate: 14.00% Tax rate: 40% Original life: 30 New rate: 11.67% Years ago issued: 5 New life: 25 Orig. flotation cost: $3,000,000 New flotation cost: $3,000,000 Years remaining on old bond: 25 Old issue flotation costs: Remaining unexpensed = (new life/original life)($flotation cost) = $ Tax saving on unexpensed float cost = $remaining unexpensed(tax rate) = $(#) = $

After tax cost of call premium: %($Amount)(untaxed%) = $

Flotation costs on new issue: $

Net after-tax cost to call the bonds: $