As Brigham and Ehrhardt discuss in Financial Management, refunding bonds involves two decisions. The first focuses on profitability, "is it profitable to call an outstanding issue in the current period and replace it with a new issue?" The second decision looks at timeliness of the refunding related to the firm's value, "would the firm's expected value be increased even more if the refunding was postponed to a later date?" ((Brigham, E. & Ehrhardt, M., p. 766). Throughout the paper, there is a review of Strayer Education's capital structure and debt philosophy, advantages and disadvantages of debt to a firm's operation and a hypothetical bond refunding situation. Recommendations, based on the questions posed above, are made.…
