Question

The Lo Sun Corporation offers a 6.3 percent bond with a current market price of $767.50. The yield to maturity is 8.49 percent. The face value is $1,000. Interest is paid semiannually. How many years until this bond matures

Answer 1

27.85 years

Step-by-step explanation:

In this question we use the NPER formula that is shown in the spreadsheet

Provided that

Present value = $767.50

Future value = $1,000

Rate of interest = 8.49% ÷ 2 = 4.25%

PMT = $1,000 × 6.3% ÷ 2 = $31.50

The formula is shown below:

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

The present value come in negative

So, after solving this, the number of years is 55.71

But in this case, it would be

= 55.71 ÷ 2

= 27.85 years