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Warson Motors wants to raisw $2 million by selling 20 year coupon bonds at par. Comparable...

Warson Motors wants to raisw $2 million by selling 20 year coupon bonds at par. Comparable bonds in the maket have a coupon rate of 6.3 percent, semiannual payments, 20 years to maturity , and are selling at 96.5 percent of par. What coupon rate
should Warson Motors set on its bonds?
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Answer #1

Warson motors should set the coupon rate at the YTM:-

=RATE(nper,pmt,pv,fv)

=RATE(20*2,6.3%/2*100,-96.5,100)*2

=6.62%

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