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The Petit Chef Co. has 10.9 percent coupon bonds on the market with seven years left to maturity. The bonds make annual payments and have a par value of $1,000. If the bonds currently sell for $1,117.33, what is the YTM

Respuesta :

Answer:

8.60%

Explanation:

We use the RATE formula i.e shown on the attached spreadsheet

Data provided in the question

Present value = $1,1173.33

Future value or Face value = $1,000  

PMT = 1,000 × 10.9% = $109

NPER = 7 years

The formula is shown below:  

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

So, after solving this, the yield to maturity is 8.60%

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