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Refunding Analysis Mullet Technologies is considering whether ornot to refund a $250 million, 15% coupon, 30-year bond issue thatwas sold 5 years ago. It is amortizing $3 million of flotationcosts on the 15% bonds over the issue's 30-year life. Mullet'sinvestment banks have indicated that the company could sell a new25-year issue at an interest rate of 11% in today's market. Neitherthey nor Mullet's management anticipate that interest rates willfall below 11% any time soon, but there is a chance that rates willincrease. A call premium of 8% would be required to retire the oldbonds, and flotation costs on the new issue would amount to $7million. Mullet's marginal federal-plus-state tax rate is 40%. Thenew bonds would be issued 1 month before the old bonds are called,with the proceeds being invested in short-term governmentsecurities returning 4% annually during the interim period.a. Conduct a complete bond refunding analysis. What is the bondrefunding's NPV? Do not round intermediate calculations. Round youranswer to the nearest cent.b. What factors would influence Mullet's decision to refund nowrather than later?