Net advantage of refunding

Net advantage of refunding

The net present value of the savings from a refunding.

Net Advantage of Refunding

The net present value of a refund. The net present value is the value in current dollars of some future cash flow and a refund is the practice of redeeming a bond before maturity by issuing another bond with a lower cost (such as a lower interest rate). If the net present value of a refund is above a certain amount, then it may be worth the cost of issuing a new bond.