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Coronel Corporation wants to issue new 20-year bonds. The company currently has 8.5 percent bonds on the market that sell for $994, make semiannual payments, and mature in seven years. What should the coupon rate be on the new bonds if the firm wants to sell them at par

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Based on the coupon rate on the bonds that sell for $994, the coupon rate that Coronel Corp. should sell to be at par is 8.62%.

What coupon rate should Coronel Corporation use?

Using a financial calculator, we can find the YTM of the bond that sells at $994.

N = 14 semi annual periods

PV = -994

Pmt = 42.50

Fv = 1,000 par value

PMT:
= (8.5% x 1,000) / 2 semi annual periods

= $4.50

The YTM would be found to be 4.308%.

Convert this to an annual figure:

= 4.308 x 2

= 8.62%

In order for the bond to be at par, the YTM and the coupon must be equal. The coupon must therefore be 8.62%.

Find out more on bonds at par at https://brainly.com/question/14443231.

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