Question:
XYZ is contemplating selling some 10-year bonds to raise funds for a planned expansion. The firm currently has an issue outstanding with $60 annual coupon, paid semiannually. These bonds currently sell for $864.10, a discount relative to their $1,000 par value, and they have 10 years remaining to maturity. What coupon rate must the new issue have if it is to sell at par when it is issued?