Question: Thalin Inc. has decided to extend its current product line. To finance the project, the firm is considering issuing a ten-year, $1,000 face value, 10

Thalin Inc. has decided to extend its current product line. To finance the project, the firm is considering issuing a ten-year, $1,000 face value, 10 percent coupon bond. The firm has made public that its target debt-to-equity ratio of 30 percent is not going to change in the foreseeable future. Two years ago the firm issued a twelve-year, $1,000 face value, 10 percent coupon bond to finance a similar project. The current market price of the bond is $1,065. At what rate should the firm issue the new bond?

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