Lydic Corporation has bonds on the market with 115 years to

Lydic Corporation has bonds on the market with 11.5 years to maturity, a YTM of 7.2 percent, a par value of $1,000, and a current price of $1,054. The bonds make semiannual payments.

What must the coupon rate be on these bonds? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Coupon rate           %

Solution

Lydic Corporation NPER 11.5 X 2 = 23 Rate 7.20% FV 1000 PV -1054 PMT $76.87 PMT(7.2%,23,-1054,1000) Annual PMT = $76.87 x 2 = $153.75 Coupon Rate = $153.75 / $1,000 = 15.38%