Coccia Co. wants to issue new 16-year bonds for some much-needed expansion proje

Question

Coccia Co. wants to issue new 16-year bonds for some much-needed expansion projects. The company currently has 10 percent coupon bonds on the market that sell for $1,075, make semiannual payments, and mature in 16 years.

What coupon rate should the company set on its new bonds if it wants them to sell at par? (Round your answer to 2 decimal places. (e.g., 32.16))

Coccia Co. wants to issue new 16-year bonds for some much-needed expansion projects. The company currently has 10 percent coupon bonds on the market that sell for $1,075, make semiannual payments, and mature in 16 years.

Explanation / Answer

If the company wants to sell them at par then the coupon rate shall be equal to the YTM on such bonds like in the floating rate bonds:

YTM=4.22%

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