Answer:
They should use interest rate of 7.7%
Explanation:
The rate (let's call it r) should be that the annual interest of the $15,000,000 that they borrow through isssuing bond is $1,150,000
Then 15*10^6 * r = 1,150,000 => r = (1.15*10^6)/(15*10^6) = 0.077 or 7.7%
Note: $1,150,000 is the annual amount they could set aside for paying interest, so they should use 7.7%. If it's lower than what market requires they will have to sell the bond at a discount. If it's higher than is required they the bond would be bought at a higher price than par-value.
