Question

A Japanese company has a bond outstanding that sells for 85 percent of its ¥100,000 par value. The bond has a coupon rate of 4.4 percent paid annually and matures in 15 years.What is the yield to maturity of this bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Yield to maturity % ?? can you show the answer and the work how to do it with my BAII plus calculator please ?

Answer 1

Answer:

YTM 5.94%

Explanation:

The yield to maturity is the rate at which the present value of the bonds coupon payment and maturity matches the current bond price:

The coupon payment is an ordinary annuity

$C \times \frac{1-(1+r)^{-time} }{rate} = PV$

Coupon payment: 4,400 (100,000Y x 4.4%)

time 15 years

rate 0.059382123

$4400 \times \frac{1-(1+0.0593821234851146)^{-15} }{0.0593821234851146} = PV$

PV 42,906.9498Y

$\frac{Maturity}{(1 + rate)^{time} } = PV$  

Maturity 100,000.00Y

time   15.00

rate  0.059382123

$\frac{100000}{(1 + 0.0593821234851146)^{15} } = PV$  

PV   42,093.05Y

PV c 42,906.9498Y

PV m 42,093.0502Y

Total 85,000Y

This is done with excel using goal seek tool or with a financial calculator.