This is for Managerial Finance. Two years ago a company issued $10 Million in bonds with a face value of $1,000

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This is for Managerial Finance. Two years ago a company issued $10 Million in bonds with a face value of $1,000

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 on the open market now when a deposit to the sinking fund is due. How much would Dolly save (before transaction costs) by purchasing 1,000 of these bonds in the open market instead of calling them in at $1,000 each?

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