Question

Ivanhoe, Inc., has four-year bonds outstanding that pay a coupon rate of 8.00 percent and make coupon payments semiannually. If these bonds are currently selling at $913.89. What is the yield to maturity that an investor can expect to earn on these bonds

Answer 1

10.70%

Step-by-step explanation:

In this question, we use the RATE formula that is shown in the attachment

Data provided in the question

Present value = $913.89

Assuming figure - Future value or Face value = $1,000

PMT = 1,000 × 8% ÷ 2 = $40

NPER = 4 years × 2 = 8 years

The formula is shown below:

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

The present value come in negative

After solving this, the yield to maturity is 10.70%