Uliana co wants to issue a 20-year bond for some much-needed expansion projects. The company currently has 6% coupon bonds on the market with a par value of $1000 that sells for $967, make semiannual payments and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 17P
icon
Related questions
Question

Uliana co wants to issue a 20-year bond for some much-needed expansion projects. The company currently has 6% coupon bonds on the market with a par value of $1000 that sells for $967, make semiannual payments and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Bonds Prices and Interest Rate
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning