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Heath Food Corporation’s bonds have 15 years remaining to maturity. The bonds have a face value...

Heath Food Corporation’s bonds have 15 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 10%. They pay interest annually and have a 7% coupon rate. What is their current yield? Round your answer to two decimal places.

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Answer #1
                  K = N
Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N
                   k=1
                  K =15
Bond Price =∑ [(7*1000/100)/(1 + 10/100)^k]     +   1000/(1 + 10/100)^15
                   k=1
Bond Price = 771.82
current yield = coupon rate*par value/current price
Current yield%=(7/100)*1000/771.82
Current yield% = 9.07
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