Ask Question
BusinessBusiness
5 January, 05:17

The Kittle Company's 30-year, $1,000 par-value bonds currently sell for $1,125.50. Assuming interest is paid annually and the bond's coupon rate is 10%, what is the bond's yield-to-maturity?

+2
Answers (1)
  1. 5 January, 08:24
    0
    Estimated YTM = 9.016%

    YTM = 8.81%

    Explanation:

    YTM is total return that is expected from a bond if it is hold until maturity. It is a long term bond yield rate but expressed as annual rate. Formula to calculate the YTM is as follow:

    Yield to maturity = [ C + (F - P) / n ] / [ (F + P) / 2 ]

    C = Coupon payment = $1,000 x 10% = $100

    F = Face Value = $1,000

    P = price of bond = $1,125.50

    n = number of years = 30 years

    Yield to maturity = [ $100 + ($1,000 - $1,125.50) / 30 ] / [ ($1,000 + $1,125.50) / 2 ]

    Yield to maturity = [ $100 + ( - 125.50) / 30 ] / [ $2,125.50 / 2 ]

    Yield to maturity = [ $100 - 4.18 ] / $1,062.75

    Yield to maturity = $95.82 / $1,062.75

    Yield to maturity = 0.09016 = 9.016% (Estimated)

    Actual YTM = 8.81%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The Kittle Company's 30-year, $1,000 par-value bonds currently sell for $1,125.50. Assuming interest is paid annually and the bond's coupon ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Paige applies to work for Quibbling & Company. Reece applies for admittance to State University. As part of their applications, Paige and Reece are asked to divulge their social media passwords.
Answers (1)
Which of the following does not describe a trial balance? a. Proves that all transactions have been recorded b. Proves the mathematical equality of debits and credits after posting c. Assists in the preparation of the financial statements d.
Answers (1)
Lance Murdock purchased a wooden statue of a Conquistador for $ 7 comma 200 to put in his home office 7 years ago. Lance has recently married, and his home office is being converted into a sewing room.
Answers (1)
Krasel Corporation exchanges old equipment for new equipment. The original cost of the old equipment was $90,000, and its accumulated depreciation at the date of exchange was $70,000.
Answers (2)
A project has an initial cost of $27,000 and a three-year life. the company uses straight-line depreciation to a book value of zero over the life of the project.
Answers (1)
New Questions in Business
For February, sales revenue is $700,000; sales commissions are 5% of sales; the sales manager's salary is $96,000; advertising expenses are $90,000; shipping expenses total 2% of sales;
Answers (1)
Steven is going to purchase two stocks to form the initial holdings in his portfolio. Iron stock has an expected return of 25 percent, while Copper stock has an expected return of 19 percent.
Answers (1)
Continuous quality improvement depends heavily upon: Select one: a. hard work b. monitoring special causes of variance c. use of checklists d. employment of the PDCA cycle
Answers (1)
The difficulty in cost-benefit analysis is that the benefits are usually evident and easily measurable, while the costs are not always evident or measurable. A) True B) False
Answers (1)
What's the difference between price skimming and price penetration strategies?
Answers (1)
Home » Business » The Kittle Company's 30-year, $1,000 par-value bonds currently sell for $1,125.50. Assuming interest is paid annually and the bond's coupon rate is 10%, what is the bond's yield-to-maturity?
Sign Up Forgot Password?