4. (10 marks) Short Essay Question Assume you are the CEO of a company that intends to issue $20 M in new bonds to help finance an expansion of your manufacturing

facilities. A new employee eager to catch the ear of the CEO suggests that by lowering the coupon rate of interest on the bond you will be able to reduce interest payments on the debt, and therefore interest expense on the Income Statement, thus increasing overall profitability. Is the rationale for this suggestion a good one? Explain.