Redesigned Computers has 6.5 percent coupon bonds outstanding with a current market price of $548. The yield to maturity is 13.2

Question

3 years ago

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Redesigned Computers has 6.5 percent coupon bonds outstanding with a current market price of $548. The yield to maturity is 13.2

percent and the face value is $1,000. Interest is paid annually. How many years is it until these bonds mature?A. 5.73 yearsB. 7.41 yearsC. 6.16 yearsD. 4.19 years

Business

1 answer:

bija089 [108] · Answer 1 · 2022-04-05T10:24:43+03:00

Answer:

17.84 years

Explanation:

For this question, we use the NPER function that is presented on the excel spreadsheet. Kindly find the attachment below:

Given that,

Present value = $548

Future value = $1,000

Rate of interest = 13.20%

PMT = $1,000 × 6.5% = $65

The formula is shown below:

= NPER(Rate,PMT,-PV,FV,type)

The present value come in negative

So, after solving this, the number of years until these bonds mature is 17.84 years