54 622
Assignments Done
98,2%
Successfully Done
In November 2017
Your physics homework can be a real challenge, and the due date can be really close — feel free to use our assistance and get the desired result.
Be sure that math assignments completed by our experts will be error-free and done according to your instructions specified in the submitted order form.
Our experts will gladly share their knowledge and help you with programming homework. Keep up with the world’s newest programming trends.

Answer on Finance Question for angela lintz

Question #35710

Coccia Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 7 percent coupon bonds on the market that sell for $1,085, 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

Expert's answer
Coupon rate is annual payout as a percentage of the bond's par value.

Compounding = semi annually 
Par Value = 1000
Market Rate = 6.5
Market Price = 972.78
N = 40
Coupon Rate Formula
Coupon Rate = 2[ (Market Price - Par Value x PVIF(ytm%, n) ) / ( Par Value x PVIFA(ytm%, n) ) ]
PVIFA(0.0325, 40) = 22.2084332365
PVIF(0.0325, 40) = 0.278225919814
Coupon Rate Calculation
Coupon Rate = 2[ (972.78 - 1000 x 0.278225919814 ) / ( 1000 x 22.2084332365 ]
Coupon Rate = 2[ 972.78 - 278.225919814 ] / 22208.4332365
Coupon Rate = 2[694.554080186 / 22208.4332365]
Coupon Rate = 2[0.0312743394723]
Coupon Rate = 6.25%

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question