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Homework answers / question archive / Meacham Enterprises' bonds currently sell for $1,280 and have a par value of $1,000
Meacham Enterprises' bonds currently sell for $1,280 and have a par value of $1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can be called in 7 years at $1,050. What is their yield to call (YTC)?
We can calculate the yield to call by using the following formula in excel:-
=rate(nper,pmt,-pv,fv)
Here,
Rate = Yield to call
Nper = 7 periods
Pmt = Annual coupon payments = $135
PV = $1,280
FV = $1,050
Substituting the values in formula:
= rate(7,135,-1280,1050)
= 8.57%
