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Chamberlain Co. wants to issue new 14-year bonds for some much-needed expansion projects. The company currently...

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Finance

Chamberlain Co. wants to issue new 14-year bonds for somemuch-needed expansion projects. The company currently has 7.8percent coupon bonds on the market that sell for $762.45, makesemiannual payments, and mature in 14 years. What coupon rateshould the company set on its new bonds if it wants them to sell atpar? Assume a par value of $1,000.

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3.7 Ratings (461 Votes)
In this question we will first find the Yield to maturity ofcurrent bondsPar value of current bonds 1000 Price of current bonds 76245 Years to maturity 14 Coupon rate for current bonds 78Semi annual coupon for current bonds    See Answer
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Chamberlain Co. wants to issue new 14-year bonds for somemuch-needed expansion projects. The company currently has 7.8percent coupon bonds on the market that sell for $762.45, makesemiannual payments, and mature in 14 years. What coupon rateshould the company set on its new bonds if it wants them to sell atpar? Assume a par value of $1,000.

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