Bowden Manufacturing intends to issue callable, perpetual bonds with annual coupon

payments. The bonds are callable at $1,175. One-year interest rates are 9%. There is a

60% profitability that long-term interest rates one year from today will be 10%, and a

40% profitability that they will be 8%. Assume that if interest rates fall the bonds will be

called. What coupon rate should the bonds have in order to sell at par value?