When calculating net present value for a bond refunding calculation, all of the following are considered either outflows or inflows EXCEPT:

Question

Quizplus · Accepted Answer

Cost savings with the new interest rates (inflow), net cost of underwriting expense on new issue (outflow), and net cost of call premium (outflow) are all considered when calculating net present value for a bond refunding calculation. However, net loss from underwriting cost on old issue is not relevant to the calculation as it is a sunk cost that cannot be recovered.

When Calculating Net Present Value for a Bond Refunding Calculation