3. A 30/360 day-count convention is employed in this present-value calculation.

4. Both expenses are tax deductible for the firm. The total expense is the call premium of $15 million plus the issuing expenses and legal fees of $2 million. The after-tax cost is equal to the before-tax cost times (1 – tax rate). Hence the after-tax cost is $17 million times (1 – 0.3), or $11,900,000.

5. The new interest expense would be $300 million times 0.078. The after-tax cost of the interest saving is $6.6 million times (1 – 0.3).