Bonds issued by the Coleman Manufacturing Company have a par value of $1,000, which of course is also the amount of principal to

Question

3 years ago

11

Bonds issued by the Coleman Manufacturing Company have a par value of $1,000, which of course is also the amount of principal to

be paid at maturity. The bonds are currently selling for $690. They have 10 years remaining to maturity. The annual interest payment is 8 percent ($80). Compute the yield to maturity.

Business

1 answer:

irinina [24] · Answer 1 · 2022-05-25T09:23:29+03:00

Answer:

14%

Explanation:

Data provided as per the question

Face value = $1,000

Present value = $690

Nper = 10

PMT = $80

The computation of yield to maturity. is shown below:-

YTM = Rate(Nper,PMT,PV,FV)

= Rate(10,80,690,1000)

= 14%

Therefore for computing the yield to maturity we simply applied the formula and put it into an excel sheet.