Explore BrainMass

Explore BrainMass

    BDJ Co: Calculate coupon rate for new bonds to sell at par

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    BDJ Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 9 percent coupon bonds on the market that sell for $1135, 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?

    © BrainMass Inc. brainmass.com December 24, 2021, 4:42 pm ad1c9bdddf

    Solution Preview

    Since the bond is selling at a premium, we know the YTM will be lower than the coupon rate. Only when the YTM equals the coupon rate, ...

    Solution Summary

    The solution explains the use of a specific Excel function to make the calculations to solve the problem of what coupon rate to use to sell at par.