Question

Ngata Corp. issued 18-year bonds 2 years ago at a coupon rate of 9.5 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM

Answer 1

Answer:

8.91%

Explanation:

In this question We applied  the Rate formula which is presented  in the attachment below:

Data given in the question

PMT = 1,000 × 9.5% ÷ 2 = $47.50

NPER = 18 years - 2 years × 2 = 32 years

Present value = $1000 × 105% = $1,050

Assuming figure - Future value = $1,000  

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after solving this, the yield to maturity is 8.91%