To provide infrastructure in the outlying areas of Morgantown, W

To provide infrastructure in the outlying areas of Morgantown, West Virginia, the city council issued 30-year bonds with a face value of $25 million. The bond coupon rate was set at 5% per year, payable semiannually. Because the market interest rate increased immediately before the bonds were sold, the city received only $23.5 million from the bond sale. What was the semiannual interest rate when the bonds were sold?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...