Question

Beam Inc. bonds are trading today for a price of

​$1,044.11.

The bond pays annual coupons with a coupon rate of 10​%

and the next coupon is due in one year. The bond has a yield to maturity of 9.12​%. How many years are there until the bond​ matures? 

The number of years until the bond matures is __ years.  ​(Round to the nearest whole​ number.)

Answer 1

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =N

1044.11 =∑ [(10*1000/100)/(1 + 9.12/100)^k]     +   1000/(1 + 9.12/100)^N

k=1

N(in years) = 7

Using Calculator: press buttons "2ND"+"FV" then assign

PV =-1044.11

PMT = Par value * coupon %=1000*10/(100)

I/Y =9.12

FV =1000

CPT N

Using Excel

=NPER(rate,pmt,pv,fv,type)

=NPER(9.12/(100),10*1000/(100),-1044.11,1000,)