Question

Current Yield for Annual Payments Heath Food Corporation’s bonds have 21 years remaining to maturity. The...

Current Yield for Annual Payments

Heath Food Corporation’s bonds have 21 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 11%. They pay interest annually and have a 7% coupon rate. What is their current yield? Round your answer to two decimal places.

Homework Answers

Answer #1

Given that the coupon rate=7% and face value=$1000, so annual coupon payment=Face value*Coupon rate=$1000*7%=$70
Yield to maturity (YTM)=11%
Years to maturity or the number of periods=21

As the present value is a cash outflow, it is shown with a negative sign in excel.
So, using excel, we get the present value of the bond=$677
Current yield=Annual coupon/Current bond price
=$70/$677
=0.103397341 or 10.34% (Rounded to two decimal places)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Problem 5-03 Current Yield for Annual Payments Heath Food Corporation’s bonds have 22 years remaining to...
Problem 5-03 Current Yield for Annual Payments Heath Food Corporation’s bonds have 22 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8%. They pay interest annually and have a 12% coupon rate. What is their current yield? Round your answer to two decimal places. _____%
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.
1. Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds...
1. Jackson Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 9.5%. The bonds have a yield to maturity of 10%. What is the current market price of these bonds? Round your answer to the nearest cent. 2. Heath Food Corporation’s bonds have 22 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 7%. They...
Heath Foods’s bonds have 10 years remaining to maturity. The bonds have a face value of...
Heath Foods’s bonds have 10 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 9%. They pay interest annually and have a 10% coupon rate. What is their current yield?
1. Yield to Maturity and Required Returns The Brownstone Corporation's bonds have 5 years remaining to...
1. Yield to Maturity and Required Returns The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8% What is the yield to maturity at a current market price of $1,062? Round your answer to two decimal places. 2. Yield to Maturity and Call with Semiannual Payments Thatcher Corporation's bonds will mature in 11 years. The bonds have a face value of $1,000...
Smiths Corporation’s bonds have 15 years remaining to maturity. Interest is paid annually, the bonds have...
Smiths Corporation’s bonds have 15 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 12%. The bonds sell at a price of $1,100. What is their yield to maturity? Round your answer to two decimal places.
Bond Valuation with Annual Payments Jackson Corporation's bonds have 9 years remaining to maturity. Interest is...
Bond Valuation with Annual Payments Jackson Corporation's bonds have 9 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds have a yield to maturity of 11%. What is the current market price of these bonds? Do not round intermediate calculations. Round your answer to the nearest cent. $  
Yield to Maturity and Required Returns The Brownstone Corporation's bonds have 5 years remaining to maturity....
Yield to Maturity and Required Returns The Brownstone Corporation's bonds have 5 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. What is the yield to maturity at a current market price of $861?Round your answer to two decimal places. 2. What is the yield to maturity at a current market price of $1,152? Round your answer to two decimal places. %
1.Jackson Corporation's bonds have 14 years remaining to maturity. Interest is paid annually, the bonds have...
1.Jackson Corporation's bonds have 14 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 7%. The bonds have a yield to maturity of 8%. What is the current market price of these bonds? Do not round intermediate calculations. Round your answer to the nearest cent. 2.Wilson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon...
Madsen Motors's bonds have 18 years remaining to maturity. Interest is paid annually, they have a...
Madsen Motors's bonds have 18 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 11%, and the yield to maturity is 12%. What is the bond's current market price? Round your answer to the nearest cent. Nesmith Corporation's outstanding bonds have a $1,000 par value, a 12% semiannual coupon, 10 years to maturity, and a 16% YTM. What is the bond's price? Round your answer to the nearest cent. A...