Problem:
A company in a lone of business similar to Bay Path's recently issued at par noncallable bonds with a coupon rate of 5.8% and a maturity of 20 years. Moody's rated the bonds Aa1 and Standard & Poor awarded them AA.
Requirement:
Question: What rate of return (yield to maturity) did investors require on these bonds if the bonds sold at par value?
Note: Show supporting computations in good form.