Huron Investments issues $4 million in 13.000% bonds maturing April 27, 2042. The bond is callable April 27, 2022 at a call premium of 3.750%.
April 27, 2022 the prevailing yield is 6.750%. If Huron Investments calls the entire issue and replaces it with 6.750% bonds also maturing April 27, 2042 then
Each semi-annual coupon payment will decrease by ________
The present value of the decrease in coupon payments is ________
The principal repayment at maturity will increase by ________
The present value of the increase in the principal repayment is ________
The present value of this decision to the company - to the nearest dollar - is ________
The company should (CALL / NOT CALL) the bond.