Question

Niendorf Corporation's 25-year maturity bonds have an 8.75% coupon rate with interest paid semiannually, and a par value of $1,000. The bonds are currently selling at a premium price of $1,250 in the bond market. What is their yield to maturity (YTM)?

Answer 1

Answer:

6.68%

Explanation:

FV= 1000

N = 25*2=50

PMT= 8.75%*1000/2= 43.75

PV = -1250

I/Y = RATE(25*2, 8.75%*1000/2, -1200, 1000)

I/Y = 0.033397

I/Y = 3.34%

YTM = 3.34% * 2

YTM = 6.68%