Tom Fong Music Inc., has an outstanding bond callable at $1,340. The total value of the bond is $100 million. The company is considering issuing a new bond and using the proceeds to buy back the existing bond The transaction cost of such refunding is $23,430,000. Suppose the tax rate is 30%. The total after-tax cost of refunding is

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.