A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par...

A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par value. The bond has a coupon rate of 6 percent paid annually and matures in 16 years. What is the yield to maturity of this bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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Expert Solution

YTM of Bond is the rate at which PV of Cash Inflows are equal to Bond Price.

Year	CF	PVF @6%	Disc CF	PVF @7%	Disc CF
0	¥ -93,000.00	1.0000	¥-93,000.00	1.0000	¥-93,000.00
1	¥ 6,000.00	0.9434	¥ 5,660.38	0.9346	¥ 5,607.48
2	¥ 6,000.00	0.8900	¥ 5,339.98	0.8734	¥ 5,240.63
3	¥ 6,000.00	0.8396	¥ 5,037.72	0.8163	¥ 4,897.79
4	¥ 6,000.00	0.7921	¥ 4,752.56	0.7629	¥ 4,577.37
5	¥ 6,000.00	0.7473	¥ 4,483.55	0.7130	¥ 4,277.92
6	¥ 6,000.00	0.7050	¥ 4,229.76	0.6663	¥ 3,998.05
7	¥ 6,000.00	0.6651	¥ 3,990.34	0.6227	¥ 3,736.50
8	¥ 6,000.00	0.6274	¥ 3,764.47	0.5820	¥ 3,492.05
9	¥ 6,000.00	0.5919	¥ 3,551.39	0.5439	¥ 3,263.60
10	¥ 6,000.00	0.5584	¥ 3,350.37	0.5083	¥ 3,050.10
11	¥ 6,000.00	0.5268	¥ 3,160.73	0.4751	¥ 2,850.56
12	¥ 6,000.00	0.4970	¥ 2,981.82	0.4440	¥ 2,664.07
13	¥ 6,000.00	0.4688	¥ 2,813.03	0.4150	¥ 2,489.79
14	¥ 6,000.00	0.4423	¥ 2,653.81	0.3878	¥ 2,326.90
15	¥ 6,000.00	0.4173	¥ 2,503.59	0.3624	¥ 2,174.68
16	¥ 6,000.00	0.3936	¥ 2,361.88	0.3387	¥ 2,032.41
16	¥1,00,000.00	0.3936	¥ 39,364.63	0.3387	¥ 33,873.46
NPV			¥ 7,000.00		¥ -2,446.65

YTM = rate at which least +ve NPV + { NPV at that rate / Chnage in NPV due to 1% inc in Disc Rate ] * 1%

= 6% + [ 7000 / 9446.65 ] * 1%

= 6% + 0.74%

= 6.74%

jeff jeffy answered 11 months ago

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