What should the coupon rate be on new bonds

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Reference no: EM131891554

1. Which is the amount that should be paid for a stock that will pay a dividend of $2.22 in one year and $6.72 in two years? After that, the stock price will grow at a constant 5% per year forever. The appropriate discount rate is 12%.

2. Dupont Metals wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 8.5 percent semiannual bonds on the market that sell for $979 and mature in 16 years. What should the coupon rate be on the new bonds if the firm wants to sell them at par?

Reference no: EM131891554

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