You own a 23-year bond that pays 14 percent interest annually

Par value or face value =1000

Price of bond = 775

coupon amount = face value*coupon rate annual

=1000*14%

=140

years to maturity (n)=23

Bond price formula = Coupon amount * (1 - (1/(1+i)^n)/i + face value/(1+i)^n

775 = 140*(1-(1/(1+i)^23))/i + 1000/(1+i)^23

Yield to maturity is that rate where bond price will be equal to current market price. We will calculate it by trial and error method and interpolation formula

Assume i is 18%

Price of bond =140*(1-(1/(1+18%)^23))/18% + 1000/(1+18%)^23

=782.7152119

Assume i is 18.4%

Price of bond =140*(1-(1/(1+18.4%)^23))/18.4% + 1000/(1+18.4%)^23

765.7848162

interpolation formula = lower rate +((uper rate - lower rate)*(Uper price - bond actual price)/(uper price - lower price))

18% +((18.4%-18%)*(782.7152119-775)/(782.7152119-765.7848162))

=0.181822807 or 18.18%

So Yield to maturity of bond is 18.18%

Note:

Excel function = rate(number of periods, coupon payment,-bond price, face value)

=rate(23,140,-775,1000)

=18.18%