Question

What is the yield to maturity of a eight​-year, $5,000 bond with a 4.5​% coupon rate and semiannual coupons if this bond is currently trading for a price of $4,615​?

A.5.71​%

B.8​%

C.6.85​%

D.2.86​%

A $47,000 loan is taken out on a boat with the terms 3​% APR for 36 months. How much are the monthly payments on this​ loan?

A.$1,640.18

B.$1,366.82

C.$1,776.86

D. $1,503.50

A pottery factory purchases a continuous belt conveyor kiln for $46,000. A 9​% APR loan with monthly payments is taken out to purchase the kiln. If the monthly payments are $482.51​, over what term is this loan being​ paid?

A.12years

B.15years

C.14years

D.13

years

Answer 1

Ans:- we will use the RATE, PMT, and NPER functions of excel to find the YTM, Monthly Payments of loan, and term of the loan.

For YTM Nper=8*2=16, PMT=$5000*4.5%/2,PV=-$4,615, FV=$5,000

For Monthly payments Rate=3%/12, Nper=36,PV=-$47,000

For Loan term Rate=9%/12,Pmt=$482.51, PV=-$46,000

Note:- In part (a) we have multiplied by 2 to calculate annual YTM and in part (c) we have divided by 12 to convert NPER into years.

YTM is 5.71%.Option A is the right answer

Monthly Payment of the Loan is $1,366.82. option B is the right answer.

The term of the loan is 14 years. option C is the right answer.

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