Question

Harrimon Industries bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%.

What is the yield to maturity at a current market price of

$872? Round your answer to two decimal places.

%

$1,116? Round your answer to two decimal places.

%

Answer 1

Par value of bonds			1000
Annual interest			90
Annuity PVF for 4yrs at 13.33%			2.95419
PVF for 4yrs at 13.33%			0.606206
Present value of Interest			265.8771
Present value of Maturity value			606.206
Price			872.0831
YTM is 13.33%
Par value of bonds			1000
Annual interest			90
Annuity PVF for 4yrs at 5.67%			3.49145
PVF for 4yrs at 5.67%			0.802035
Present value of Interest			314.2305
Present value of Maturity value			802.035
Price			1116.266
YTM is 5.67%