Time value of money is calculated in all of the bond refunding calculations except ________ because this is a one-time exchange of cash that happens on the day it is refunded.

Question

Quizplus · Accepted Answer

The net cost of call premium is a one-time payment and does not involve any time value of money calculations. However, cost savings with the new interest rates, net gain from underwriting cost on old issue, and net cost of underwriting expense on new issue all involve time value of money calculations as they are based on future cash inflows and outflows.

Time Value of Money Is Calculated in All of the Bond