Its annual compound yield to maturity (YTM) is $881.00
An annual compound hobby is calculated by multiplying the initial main amount by one plus the once-a-year hobby fee raised to the wide variety of compound durations minus one. A hobby may be compounded on any given frequency agenda, from continuous to every day to annually.
"12% hobby" approach that the hobby fee is 12% in keeping with year, compounded annually. "12% interest annual compound monthly" manner that the hobby charge is 12% in line with the year (no longer 12% consistent with month), compounded month-to-month. Consequently, the hobby price is 1% (12% / 12) in line with the month.
A compound hobby is the addition of a hobby to the principal sum of a mortgage or deposit, or in other phrases, interest on essential plus interest.
First, find YTM
N = 20
I = YTM
PV = -860
PMT = 50
FV = 1000
YTM = 6.245%
The price after 5 years is nothing but the future value of the bond after 5 years
N = 5
I = YTM = 6.245
PV = -860
PMT = 50
FV = $881
So the answer is $881.00
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