Ngata Corp Issued 18 Year Bonds – Solution Guide ACC 402

Ngata Corp Bond Solution

Ngata Corp. issued 18-year bonds 2 years ago at a coupon rate of 9.7 percent. The bonds make semiannual payments. If these bonds currently sell for 101 percent of par value, the YTM is

 
  • Student: Alex Humphrey
  • Textbook: Tools for Business Decision Makers
  • Course: ACC 402
 

Solution Guide

97% x 100 = $97
100 x 11% x PVIFA
100/{(1+r%)^[(18-2)*2]}
97 = 11*PVIFA(r%,32)+
100/[(1+r%)^32]

YTM-r = 9.77%

 

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