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Chamberlain Co. wants to issue new 17-year bonds for some much-needed expansion projects. The company currently has 7.0 percent coupon bonds on the market that sell for $827.53, make semiannual payments, and mature in 17 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? Assume a par value of $1,000. Multiple Choice • 8.70% • 9.00% • 9.30% • 8.90% • 4.50%

Expert Solution

New coupon rate is calculated using the RATE function as follows:

=RATE(nper,pmt,pv,fv)

=RATE(17*2,7%/2*1000,-827.53,1000)*2

=9.00%

jeff jeffy answered 2 years ago

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