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In: Finance

Dan is considering the purchase of Super Technology, Inc. bondsthat were issued 9 years ago....

Dan is considering the purchase of Super Technology, Inc. bonds that were issued 9 years ago. When the bonds were originally sold they had a 21-year maturity and a 6.54 percent coupon interest rate, paid annually. The bond is currently selling for $900. Par value of the bond is $1,000. What is the yield to maturity on the bonds if you purchased the bond today? Round the answers to two decimal places in percentage form. You should use Excel or financial calculator.

Solutions

Expert Solution

Ans:- we will use the RATE function of excel to find the yield to maturity on the bond. Number of years to maturity 21-9 = 12 years.

Nper=21-9=12,Pmt=$1000*6.54%=$65.40,PV=-$900, FV=$1000

Therefore, the YTM of the bond if it is purchased today will be 7.86%.

jeff jeffy answered 2 years ago
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