Waste Management, Unlimited (WM) has a $220 million, 9.2% coupon(paid semiannually), outstanding bond issue, which matures inexactly 8 years, and WM is considering refunding the debt. The callprice per $1,000-par-value bond is $1,092. The replacement debtwould have a 7.76% coupon (paid semiannually). The firm's tax rateis 30%. What is the net advantage to refunding (NA) in thiscase?
