A company's existing bonds are 10 million US dollars, the coupon rate is 16%, and the remaining term is 5 years. The company intends to redeem existing bonds at a price of $10.5 million and issue new bonds with a coupon rate of 10% at this price. Market interest rates and corporate income tax rates are 10% and 40%.

In the current environment of falling interest rates, will the company issue new bonds to redeem old bonds?

How much impact does this debt repayment operation have on the company?

If a company wants to issue bonds and predicts that market interest rates will fall in the future, should the company issue callable bonds?