The Graf Company needs to finance some new R&D programs, so it will sell new bonds for this purpose. Graf's currently ou

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The Graf Company Needs To Finance Some New R D Programs So It Will Sell New Bonds For This Purpose Graf S Currently Ou 1 (33.34 KiB) Viewed 26 times

The Graf Company needs to finance some new R&D programs, so it will sell new bonds for this purpose. Graf's currently outstanding bonds have a $1,000 par value, a 10% coupon rate, and pay interest semiannually. The outstanding bonds have 25 years remaining to maturity, are callable after 5 years at a price of $1,090, and currently sell at a price of $700. The yield curve is expected to remain flat. On the basis of these data, what is the best estimate of Graf's nominal interest rate on the new bonds it plans to sell? a. 21.10% b. 14.48% C. 15.67% d. 16.25% e. 18.29%