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