What coupon rate should be set for the new bonds

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Use the following information to answer this and the following question. The Zara Company has an 8% coupon bond outstanding. The bond makes semiannual coupon payments and has 15 years remaining to maturity. Its market price is $877.78. It is issuing a new 20-year bond to finance a factory to make new Zaras. The new bond will make annual coupon payments. What is the yield to maturity of the Zara Company's existing bonds?

What coupon rate should be set for the new bonds of for these new bonds to sell at par (i.e. for $1,000)?

How many years will it take for $1,000 to grow to $6,000 at a rate of 18 percent compounded monthly?

Reference no: EM132459457

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