(Yield to maturity)The Saleemi Corporation's $1,000 bonds pay 7 percent interest annually and have 12 years...
(Yield to maturity)The Saleemi Corporation's $1,000 bonds pay 7 percent interest annually and have 12 years until maturity. You can purchase the bond for $1,085.
a. What is the yield to maturity on this bond? (Round to two decimal places.)
b. Should you purchase the bond if the yield to maturity on a comparable-risk bond is 7 percent?
Homework Answers
a) Yield to maturity is calculated using the RATE function:-
=RATE(nper,pmt,pv,fv)
=RATE(12,7%*1000,-1085,1000)
=5.99%
b) No the bond should not be purchased
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