Crossfade Co. issued 13-year bonds two years ago at a coupon rate of 8.8 percent

Question

Crossfade Co. issued 13-year bonds two years ago at a coupon rate of 8.8 percent. The bonds make semiannual payments.

If these bonds currently sell for 112 percent of par value, what is the YTM? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Crossfade Co. issued 13-year bonds two years ago at a coupon rate of 8.8 percent. The bonds make semiannual payments.

If these bonds currently sell for 112 percent of par value, what is the YTM? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Explanation / Answer

YTM = rate(nper,pmt,pv,fv)*2

Nper (indicates the semi annual period) = (13-2)*2 = 22

PV (indicates the price) = 112%*1000 = 1120

PMT (indicate the semi annual payment) = 1000*8.80%*1/2 = 44

FV (indicates the face value) = 1000

Rate (indicates YTM) = ?

YTM = rate( 22,44,-1120,1000)*2

YTM = 7.20%

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