Chamberlain Co. wants to issue new 15-year bonds for some much-needed expansion

Question

Chamberlain Co. wants to issue new 15-year bonds for some much-needed expansion projects. The company currently has 9 percent coupon bonds on the market that sell for $1,070, make semiannual payments, and mature in 15 years.

What coupon rate should the company set on its new bonds if it wants them to sell at par? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Chamberlain Co. wants to issue new 15-year bonds for some much-needed expansion projects. The company currently has 9 percent coupon bonds on the market that sell for $1,070, make semiannual payments, and mature in 15 years.

Explanation / Answer

if it set 8.18% interest rate paid semi-annually, bonds will set par.

Face value (FV) $                                  1,000.00 Coupon rate 9.00% Number of compounding periods per year 2 Interest per period (PMT)                                            45.00 Bond price (PV) $                               (1,070.00) Number of years to maturity 15 Number of compounding periods till maturity (N) 30 Bond Yield to maturity RATE(NPER,PMT,PV,FV)*2 Bond Yield to maturity 8.18%

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.