Navistar Electric issued 1000 debenture bonds 2 years ago with a face value of $5,000 each and a bond interest rate of 15% per y
1 answer:
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Answer:
The correct answer is 18.84%.
Explanation:
According to the scenario, computation of the given data are as follows:
Time period ( Nper) = 18 years
Rate = 9.625%
Let FV = $1,000
Coupon rate = 7.625%
Then, Coupon payment = $1,000 × 7.625% = $76.25
Attachment is attached of financial calculator
So PV = $831.95
After 1 year
Time period (Nper) = 17 years
Rate = 8.625%
Payment = $76.25
Attachment is attached of financial calculator
So, Pv = $912.46
So, we can calculate the holding period return by using following formula:
Holding period return = Total return ÷ Investment × 100
= ( $912.46 + $76.25 - $831.95) ÷ $831.95 × 100
= 18.84%
