Redesigned Computers has 7 percent (APR) coupon bonds outstanding with a current market price of $882.80. The yield to maturity is 8.34 percent (APR) and the face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures?
Please show how to use the financial calculator to solve it.
Information provided:
Face value= future value= $1,000
Coupon rate= 7%/2= 3.5%
Coupon payment= 0.035*1,000= $35
Yield to maturity= 8.34%/2= 4.17% per semi-annual period
Current price= present value= $882.80
The years to maturity is computed by entering the below in a financial calculator:
FV= 1,000
PMT= 35
I/Y= 4.17
PV= -882.80
Press the CPT key and N to compute the years to maturity.
The value obtained is 31.9987.
Therefore, the years to maturity is 31.9987/2= 15.9991 years 16 years.
In case of any query, kindly comment on the solution.
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