Question

Beam Inc. bonds are trading today for a price of $155.39.

The bond pays annual coupons with a coupon rate of 9%

and the next coupon is due in one year. The bond has a yield to maturity of 7.32%.

How many years are there until the bond​ matures?  

Answer 1

Given information:

Present value (PV) = $842.27

Future value (FV) = $1,000

YTC ( rate) = 9.26%

Coupon rate = 7.5%

Calculations are:

Coupon payment = FV * Coupon rate

= $1,000 * 7.5%

= $75

Number of years to mature = 20 years

By using excel formula:

=NPER(rate,pmt,pv,fv)

=NPER(9.26%,75,-842.27,1000)

20.00 years.