Q19 BDJ Co. wants to issue new 25-year bonds for some much-needed expansion projects. The company currently has 7.8 percent coupon bonds on the market that sell for $1,125, make semiannual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?

College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter22: Corporations: Bonds
Section: Chapter Questions
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Q19
BDJ Co. wants to issue new 25-year bonds
for some much-needed expansion projects.
The company currently has 7.8 percent
coupon bonds on the market that sell for
$1,125, make semiannual payments, and
mature in 20 years. What coupon rate should
the company set on its new bonds if it wants
them to sell at par?
Transcribed Image Text:Q19 BDJ Co. wants to issue new 25-year bonds for some much-needed expansion projects. The company currently has 7.8 percent coupon bonds on the market that sell for $1,125, make semiannual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?
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