Question

Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have a 8% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $910.40. The capital gains yield last year was -8.96%.What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.

Answer 1

9.53%

Step-by-step explanation:

In this question, we use the Rate formula which is shown in the spreadsheet.

The NPER represents the time period.

Given that,

NPER - 9 years

PMT - $1,000 × 8% = $80

Present value = $910.40

Future value = $1,000

The formula is shown below:

= Rate(NPER;PMT;PV;FV;Type)

The present value come in negative

So, after solving this, the answer would be 9.53%