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Iteru [2.4K]
3 years ago
5

West Corp. issued 25-year bonds two years ago at a coupon rate of 5.3 percent. The bonds make semiannual payments. If these bond

s currently sell for 105 percent of par value, what is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Business
1 answer:
slava [35]3 years ago
6 0

Answer:

4.93%

Explanation:

We use the Rate formula shown in the spreadsheet for this question

The time period is represented in the NPER.

Provided that,  

Present value = $1,000 × 105% = $1,050

Assuming figure - Future value or Face value = $1,000  

PMT = 1,000 × 5.3% ÷ 2 = $26.5

NPER = 25 years - 2 years = 23 years × 2 = 46 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after solving this, the yield to maturity is 4.93%

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