Bond Features Maturity (years) 5 Face Value = $1,000 Coupon Rate = 7.00% Coupon dates (Annual) Market interest rate today 7.00% Time to call (years) 3 Price if Called $1,070.00 Market interest rate in

Bond Features Maturity (years) 5 Face Value = $1,000 Coupon Rate = 7.00% Coupon dates (Annual) Market interest rate today 7.00% Time to call (years) 3 Price if Called $1,070.00 Market interest rate in Year 3 4.00% The above bond is callable in 3 years. When the bond is issued today, interest rates are 7.00% . In 3 years, the market interest rate is 4.00% . Should the firm call back the bonds in year 3 and if so, how much would the firm save or lose by calling back the bonds?