The board of directors of BWL has decided to go for this project and the Board instructed newly hired financial analyst, Max Wilson to organize to sell $ 14 million in new 10-year bonds to finance the project. The bonds make yearly payments. BWL decided to issue discounted bond because companys debt rating was BBB. The chairman of the board instructed Max that he is indifferent towards receiving full amount ($ 14M.) or 90% of par value. By analysing similar risk bonds issued, Max decided Yield to maturity (YTM) to be 5%. Furthermore, Max has to decide about which bond features BWL should consider and what coupon rate the bond issue is likely to have to meet companys financial requirements.

Calculate Coupon rates to set on its bonds (90% of par value and par value respectively), and evaluate.