Question

Parkway Void Co. issued 14-year bonds two years ago at a coupon rate of 10.2 percent. The bonds make semiannual payments. If these bonds currently sell for 96 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.)

Answer 1

Answer:

10.80%

Explanation:

For this question ,we use the RATE formula that is shown in the spreadsheet attachment. Kindly find it below:

Given that,  

Present value = 1,000 × 96% = $960

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

PMT = 1,000 × 10.2% ÷ 2 = $51

NPER = (14 years - 2 years) × 2 = 24 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 10.80%