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 October 9, 2019, 11:27 pm ad1c9bdddf
Please refer attached file for better clarity of tables and formulas.
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
Solution describes the steps to calculate yield to mturity (YTM) for a given coupon paying bond.