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The problem is asking what coupon rate Uliana Company should set on its new bonds to sell at par. Here is how we approach the solution:

### Given:
- The current bond has a **9.4% coupon rate**.
- The current bond is selling for **$1,134**.
- The current bond makes **semiannual payments**.
- Par value = **$1,000**.
- The bond **matures in 18 years**.

### Goal:
Find the coupon rate on new bonds so that they **sell at par** ($1,000).

### Step-by-Step Approach:

1. **Determine the yield to maturity (YTM)** of the existing bonds:
   Since the bond price is above par ($1,134), the YTM will be lower than the coupon rate (9.4%). We use the present value formula for bonds:
   
   \[
   P = \frac{C}{(1 + r/2)} + \frac{C}{(1 + r/2)^2} + \dots + \frac{C + F}{(1 + r/2)^{2n}}
   \]
   
   Where:
   - $ P = 1,134 $ (price)
   - $ C = 9.4\% \times 1000 = 94 $ (annual coupon payment)
   - $ F = 1,000 $ (par value)
   - $ n = 18 $ (years to maturity)
   - $ r = \text{YTM (unknown)}
   
   We solve for \( r $ (YTM).

2. **Calculate coupon rate for the new bond:**
   Once we find the YTM, we set this as the required coupon rate for the new bond to sell at par ($1,000).

I'll now perform the calculations to find the YTM of the existing bond and the coupon rate for the new bond.The yield to maturity (YTM) for the current bond is approximately **7.98%** annually.

To sell the new bonds at par, Uliana Company should set the coupon rate equal to this YTM. Therefore, the coupon rate for the new bonds should be **7.98%**.

Would you like more details on any of the steps, or have any other questions?

Here are 5 related questions for further exploration:
1. How does bond pricing change with fluctuating interest rates?
2. What is the relationship between bond price and coupon rate?
3. How can YTM be calculated using a financial calculator?
4. What are the risks associated with issuing bonds at par value?
5. How do different payment schedules (e.g., annual vs. semiannual) affect bond pricing?

**Tip:** When bond prices rise above par value, it means the market's required yield is lower than the bond's coupon rate.

Uliana Company wants to issue new 18-year bonds for some much-needed expansion projects. The company currently has 9.4 percent coupon bonds on the market that sell for $1,134, make semiannual payments, have a par value of $1,000, and mature in 18 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?

This problem involves calculating the coupon rate for new bonds to sell at par, using a semiannual bond pricing model. The existing bond with a 9.4% coupon rate and price of $1,134 is used to determine the yield to maturity (YTM), leading to the coupon rate needed for new bonds. Suitable for college-level finance courses.

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