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Bruin Co. wants to issue a new 10-year bonds to support its expansion plans. The company...

Bruin Co. wants to issue a new 10-year bonds to support its expansion plans. The company currently has 11.3 percent coupon bonds on the market that sell for $1,075, make semiannual payments and mature in 10 years. The face value of the bond is $1,000. What approximate coupon rate should the company set on its new bonds if it wants to sell at a par?

a. 9.8 percent

b. 10.2 percent

c. 12.1 percent

d. 11.1 percent

e. 11.6 percent

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Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

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