Zheng Corporation plans to issue new bonds to finance its expansion plans
In its efforts to price the issue, Zheng Corporation has identified a company of similar risk with an outstanding bond issue that has an 8 percent coupon rate having a maturity of ten years. This firm's bonds are currently selling for $1,091.96. If interest is paid annually for both bonds, what must the coupon rate of the new bonds be in order for the issue to sell at par?
A) 5.78%
B) 6.88%
C) 6.50%
D) 6.71%
D
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