Calculating Investor's Yield to Maturity
Not what you're looking for? Search our solutions OR ask your own Custom question.
You are considering the purchase of Hytec bonds that were issued 14 years ago. When the bonds were originally sold, they had a 30-year maturity and a 14.375% coupon interest rate that is payable semiannually. The bond is currently selling for $1,508.72. What is the yield to maturity on the bonds?
© BrainMass Inc. brainmass.com December 15, 2022, 7:53 pm ad1c9bdddfhttps://brainmass.com/business/discounted-cash-flows-model/calculating-investor-s-yield-to-maturity-256962
Solution Preview
Please refer attached file for better clarity of tables and formulas.
Solution:
Face Value of bond=$1,000.00
Semi annual Coupon amount=(1000*14.375%)/2=$71.875
Time left for maturity=30-14=16
No. of coupon payment left=2*16=32
Current price of bond=$1,508.72
Let us see cash flows of coupons, maturity and purchase values
Period ...
Solution Summary
Solution describes the steps to calculate yield to mturity (YTM) for a given coupon paying bond.
$2.49