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# Bond Yield to Maturity - Debt Financing

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Tidewater Home Health Cae, Inc. has a bond issue outstanding with eight years remaining to maturity, a coupon rate of 10 percent with interest paid annually, and a par value of \$1,000. The current market price of the bond is \$1,251.22.
a. What is the bond's yield to maturity?
b. Now, assume that the bond has semiannual coupon payments. What is its yield to maturity in this situation?

#### Solution Preview

Tidewater Home Health Cae, Inc. has a bond issue outstanding with eight years remaining to maturity, a coupon rate of 10 percent with interest paid annually, and a par value of \$1,000. The current market price of the bond is \$1,251.22.

a. What is the bond's yield to maturity?

Yield to maturity

Yield to maturity can be calculated using Excel worksheet function RATE

Data
No of years to maturity= 8
Coupon rate= 10.00%
Face (Par) value= \$1,000
Frequency ...

#### Solution Summary

The solution calculates yield to maturity for a bond with annual and semi-annual coupon payments.

\$2.49