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Two years ago a company issued $10 million in bonds with a face value of $1 090 and a maturity of 10 years . The
Two years ago a company issued $10 million in bonds with a face value of $1 090 and a maturity of 10 years . The company is supposed to put aside $1 million in a sinking fund each year to pay off the bonds . Dolly Frisco the finance manager of the company has found out that the bonds are selling at $800 apiece in the open market now when a deposit to the sinking fund is due . How much would Dolly save ( before transaction costs ) by purchasing 1000 of these bands in the open market instead of calling them in at $1 000 each
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