Question

The BondsCanBeFun Company has 12 year, $1,000 par value, 6% coupon (paid annually) bonds currently selling at $849.28. SHOW A

pls type not write, and calculations need to be shown w/ steps to TI BAII PLUS CALCULATOR

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Answer #1

YTM is the rate at which PV of cash Inflows are equal to Price of Bond

Year CF PVf @8% Disc CF
1 $      60.00 0.925926 $   55.56
2 $      60.00 0.857339 $   51.44
3 $      60.00 0.793832 $   47.63
4 $      60.00 0.73503 $   44.10
5 $      60.00 0.680583 $   40.83
6 $      60.00 0.63017 $   37.81
7 $      60.00 0.58349 $   35.01
8 $      60.00 0.540269 $   32.42
9 $      60.00 0.500249 $   30.01
10 $      60.00 0.463193 $   27.79
11 $      60.00 0.428883 $   25.73
12 $      60.00 0.397114 $   23.83
12 $ 1,000.00 0.397114 $ 397.11
PV of Cash Inflows $ 849.28

Thus YTM is 8%

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