Best Lodging has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 5 years, and have a 6 per
cent coupon. The current price $1,010. What is the yield to maturity?
1 answer:
Answer:
5.77%
Explanation:
In this question, we use the rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $1,010
Future value = $1,000
NPER = 5 years × 2 = 10 years
PMT = (1,000 × 6%) ÷ 2 = 30
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the answer would be 5.77%
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