Answer:
The remaining maturity of these bonds is 76 years.
Explanation:
Where the face value of the bond is not specified, it is typically assumed as $1000. Hence,
Face value = $1000
Annual coupon payment = Face value x Annual coupon rate
= $1000 x 4.8%
= $48
Current yield = Annual coupon payment / Current price
Hence, Current price = Annual coupon payment / Current yield
= $48 / 5.4861%
= $874.938
Time to maturity = NPER (0.055, 48, -874,938, 1000,0)
= 76
Therefore, the remaining maturity of these bonds is 76 years.
Answer:
The period to maturity is 76 years
Explanation:
In order to calculate the remaining maturity period for the bond, the current price-the present value of the bond, is required and it calculated thus:
the current price of the bond =periodic coupon/current yield of the bond
periodic coupon is 4.8%* par value
standard par value is $1000
coupon =$1000*4.8%
=$48
current yield is 5.4861%
the current price of the bond=$48/5.4861%
=$874.94
The remaining maturity is computed thus:
nper(rate,pmt,-pv,fv)
where nper is the period to maturity
rate is 5.5% rate to maturity
pmt is $48
pv is $874.94
fv is $1000
=nper(5.5%,48,-874.94,1000)
=75.68
nper=period to maturity=76 years
Find attached excel file as well
