Problem:
Pembroke Co. wants to issue new 20-year bonds for some much needed expansion projects. The company currently has 10 percent coupon bonds on the market that sell for $1,063, make semiannual payments, and mature in 20 years.
Required:
Question: What coupon rate should the company set on its new bonds if it wants them to sell at par?
Note: Show supporting computations in good form.