Question

Best Lodging has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 5 years, and have a 6 percent coupon. The current price $1,010. What is the yield to maturity?

Answer 1

5.77%

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,

Present value = $1,010

Future value = $1,000

NPER = 5 years × 2 = 10 years

PMT = (1,000 × 6%) ÷ 2 = 30

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 5.77%