Problem:
AJ Pharmaceuticals would like to issue 20-year bonds to obtain the remaining funds for the new, Mexico plant. The company currently has 6.5% semiannual coupon bonds in the market that sell for $1,040 and mature in 20 years.
Required:
Question: What coupon rate should AJ Pharmaceuticals set on its new bonds to sell them at par value?
Note: Be sure to show how you arrived at your answer.