# Heymann Company's Bonds: Yield to Maturity

6-7 The Heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $1000 par value; and the coupon interest rate is 9%.

a) What is the yield to maturity at a current market price of (1) $829 or (2) $1104?

b) Would you pay $829 for one of these bonds if you thought that the appropriate rate of interest was 12%-that is, if Rd=12%? Explain your answer.

https://brainmass.com/business/bond-valuation/heymann-company-s-bonds-yield-to-maturity-193593

#### Solution Preview

See attached file.

6-7 The heymann Company's bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $1000 par value; and the coupon interst rate is 9%.

a) What is the yield to maturity at a current market price of (1) $829 or (2) $1104?

Yield to maturity

Yield to maturity can be calculated using Excel worksheet function RATE

a) Current Market Price= $829

Data

No of years= 4

Coupon rate= 9.00%

Face value= $1,000

Frequency = A = ...

#### Solution Summary

The Yyeld to maturity of Heymann Company's bonds are calculated for different current market prices.