Bond Redemption Decision Armstrong Areo Ace, a flight training school, issued $100,000 of 20-year bonds at face

Question:

Bond Redemption Decision Armstrong Areo Ace, a flight training school, issued $100,000 of 20-year bonds at when the market rate was 10%. The bonds have been outstanding for ten years. The company pays annual interest on January 1. The current rate for similar bonds is 4%. On January 1, the controller would like to retire the bonds at 102 and then issue $100,000 of ten-year bonds to pay 4% annual interest.

Required
Draft a memo to the controller advising him to retire the outstanding bonds and issue new debt. Ignore taxes.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...