Question: The State of Florida issued $1,000,000 of 12 percent coupon. 10-year annual payment, tax-exempt bonds 5 years ago. The bond had 5 years of call protection, but now the state can call the bond if its chooses to do so. The call premium would be 2 percent of the face amount. The 5-year, 10 percent, annual payment bond can be sold at par, but flotation costs on this issue would be 4 percent, or $40,000. What is the net present value of the refunding?