Stilley Resources bonds have 20 years left to maturity. Interest is paid annually, and the bonds...

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Stilley Resources bonds have 20 years left to maturity. Interestis paid annually, and the bonds have a $1,000 par value and acoupon rate of 21.5 percent.

Compute If the price of the bond is $1,330, what is the yield tomaturity? (Do not round intermediate calculations. Inputyour answer as a percent rounded to 2 decimal places.)
Yield to maturity %

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4.1 Ratings (867 Votes)

Par/Face value	1000
Annual Coupon rate	0.215
Annual coupon	215

Present Value = Future value/ ((1+r)^t)
where r is the interest rate and t is the time period
price of the bond = sum of present values of future cash flows
Price of the bond	1330
Use excel to find r
r	0.1595
mt	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20
future cash flow	215	215	215	215	215	215	215	215	215	215	215	215	215	215	215	215	215	215	215	1215
present value	185.4248	159.9179	137.9197	118.9475	102.5852	88.47365	76.30328	65.80705	56.75468	48.94755	42.21436	36.40738	31.39921	27.07995	23.35485	20.14218	17.37143	14.98183	12.92094	62.97399
sum of present values	1330

Yield to maturity	15.95%

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Stilley Resources bonds have 20 years left to maturity. Interestis paid annually, and the bonds have a $1,000 par value and acoupon rate of 21.5 percent. Compute If the price of the bond is $1,330, what is the yield tomaturity? (Do not round intermediate calculations. Inputyour answer as a percent rounded to 2 decimal places.)Yield to maturity%