Ask Question
24 January, 08:06

Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have a 9% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $950.70. The capital gains yield last year was - 4.93%. What is the yield to maturity

+3
Answers (1)
  1. 24 January, 08:11
    0
    The answer is 9.85%

    Explanation:

    The number of periods N = 9years (10 years minus 1 year ago)

    Yield to Maturity (I/Y) = ?

    Present value of the bond (PV) = $950.70

    Future value of the bond (FV) = $1,000

    Annual payment (PMT) = $90 (9% x $1,000)

    Using a financial calculator to solve the problem (BA II plus Texas instruments):

    Yield to Maturity (I/Y) = 9.85%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have a 9% annual coupon rate and were issued 1 year ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers