Problem:
Pembroke Co. wants to issue new 20-year bonds for some much needed expansion projects. The company currently has 8 percent coupon bonds on the market that sell for $983, making annual payments, and mature in 20 years.
Required:
Question 1: What coupon rate should the company set on its new bonds if it wants to sell them to sell at par?
Note: Please describe comprehensively and provide step by step solution.