Answer:
The yield to maturity is 12.69%
The yield to call 15.29%
Explanation:
The yield to maturity can be computed using the rate formula in excel,which is :rate(nper,pmt,-pv,fv)
nper is the 14 which number of years to maturity
pmt is the periodic coupon on the bond 8.25%*$100=$8.25
pv is the current price of the bond at $71.589
fv is the face value of the bond payable on redemption which is $100
=rate(14,8.25,-71.589,100)
=12.69%
The yield to call also be computed same way
nper is 8 years
pmt is the same at $8.25
pv is $71.589
fv is at 9% premium $100*(1+9%)=$109
=rate(8,8.25,-71.589,109)
=15.29%
