The Petit Chef Co. has 10.9 percent coupon bonds on the market with seven years left to maturity. The bonds make annual payments
and have a par value of $1,000. If the bonds currently sell for $1,117.33, what is the YTM
1 answer:
Answer:
8.60%
Explanation:
We use the RATE formula i.e shown on the attached spreadsheet
Data provided in the question
Present value = $1,1173.33
Future value or Face value = $1,000
PMT = 1,000 × 10.9% = $109
NPER = 7 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
So, after solving this, the yield to maturity is 8.60%
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