Question

Shinoda Corp. has 9 percent coupon bonds making annual payments with a YTM of 8.4 percent. The current yield on these bonds is 8.75 percent. How many years do these bonds have left until they mature?

Answer 1

6.33 years

Step-by-step explanation:

In this question, we determine the NPER or the time period that is shown in the attached spreadsheet

Given that,

Present value = (9% × $1,000) ÷ (8.75%) = $1,028.57

Assuming figure Future value = $1,000

Rate of interest = 8.4%

PMT = $1,000 × 9% = $90

The formula is shown below:

= NPER(Rate;PMT;-PV;FV;type)

The present value come in negative

So, after solving this, the answer would be 6.33 years