Question

In: Finance

Ezzell Enterprises’ noncallable bonds currently sell for $1,165.

Ezzell Enterprises’ noncallable bonds currently sell for $1,165. They have a 15-year maturity, an annual coupon of $95, and a par value of $1,000. What is their yield to maturity?

Solutions

Expert Solution

NPER = 15 (period of bonds)

PMT = 95 (annual interest payments)

PV = -1165 (current price of bonds)

FV = 1000 (par value of bonds)

Rate =indicates YTM

Yield to maturity (YTM) = Rate(NPER,PMT,PV,FV) = Rate(15,95,-1165,1000) = 7.62%

Their yield to maturity is 7.62%


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