Large Industries annual bonds are selling at 81.7 (i.e., the price is 81.7% of the $1,000...

Large Industries annual bonds are selling at 81.7 (i.e., the price is 81.7% of the $1,000 face value). There are 9 years remaining until maturity on the bonds and the yield to maturity is 7.75%. Find the coupon rate. (Note: you may have to use a trial and error solution method)

Expert Solution

n = 9, i = 7.75%, M = $1000, P = 81.7% * $1000 = $817

817 = C * 6.312355 + 510.7925

306.2075 = C * 6.312355

C = $48.51

Coupon Rate = $48.5/$1000 = 4.85%

jeff jeffy answered 2 years ago

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