Coccia Co. wants to issue new 15-year bonds for some much-needed expansion proje
ID: 2750656 • Letter: C
Question
Coccia Co. wants to issue new 15-year bonds for some much-needed expansion projects. The company currently has 6 percent coupon bonds on the market that sell for $1,030, 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? (Round your answer to 2 decimal places. (e.g., 32.16))
Coccia Co. wants to issue new 15-year bonds for some much-needed expansion projects. The company currently has 6 percent coupon bonds on the market that sell for $1,030, make semiannual payments, and mature in 15 years.
Explanation / Answer
Hence, if the coupon rate is set at 5.70%, Bond will sell at par.
Face value (FV) $ 1,000.00 Coupon rate 6.00% Number of compounding periods per year 2 Interest per period (PMT) 30.00 Bond price (PV) $ (1,030.00) 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 5.70%