Answer:
9.12%
Explanation:
Yield to maturity is also known as the internal rate of return of a bond
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested
YTM can be calculated with a financial calculator
Cash flow in year 0 = -950
Cash flow each year from year 1 to 5 = 80
Cash flow in year 6 = 100 + 80 = 1080
YTM = 9.12%
To determine YTM using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.