# Approximate yield to maturity

Question to work:

a.

Bonds issued by West Motel Chain have a par value of $1000, are selling for #1,100, and have 20 years remaining to maturity. The annual interest payment is 13.5% ($135). Compute the approximate yield to maturity.

Use formula as follows:

Approximate yield to maturity (Y') =

Annual interest payment + (plus)

(Principal payment - Price of the bond) <<<---numerator]; divided by (another numerator) of number of years to maturity divided by (denominator) 06.(Price of the bond) + 0.4 (Principal payment)

b. Combine a trail and error approach with interpolation to find a more exact answer for this part b.

A calculator can be used, but all calculations and explanations can be presented in MS Word instead of MS Excel.

https://brainmass.com/business/bond-valuation/applying-approximate-yield-maturity-362788

#### Solution Preview

Please see the attachment.

Question to work:

a.

Bonds issued by West Motel Chain have a par value of $1000, are selling for #1,100, and have 20 years remaining to maturity. The annual interest payment is 13.5% ($135). Compute the approximate yield to maturity.

Use formula as follows:

Approximate yeld to maturity (Y') =

Annual interest payment + (plus)

(Principal payment - Price of the bond) <<<---numeratior]; divided by (another numerator) of ...

#### Solution Summary

The solution explains how to calculate the approximate yield to maturity on a bond