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Bowdeen Manufacturing intends to issue callable, perpetual bondswith annual coupon payments. The bonds are callable at $1,220.One-year interest rates are 10 percent. There is a 60 percentprobability that long-term interest rates one year from today willbe 12 percent, and a 40 percent probability that they will be 9percent. Assume that if interest rates fall the bonds will becalled. What coupon rate should the bonds have in order to sell atpar value? Assume a par value of $1,000. (Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.) Coupon rate at par value%
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