Computation of Yield to Maturity using Rate Function in Excel:

=rate(nper,pmt,-pv,fv)

Here,

Rate = Yield to Maturity = ?

Nper = 12 years 

PMT = $1,000*8% = $80

PV = $980

FV = $1,000

Substituting the values in formula:

=rate(12,80,-980,1000)

Rate or Yield to Maturity = 8.27%

 

Computation of Stock Price three Years from Today using PV Function in Excel:

=-pv(rate,nper,pmt,fv)

Here,
PV = Stock Price or Present Value = ?

Rate = 8.27%

Nper = 12-3 = 9 years 

PMT = $1,000*80% = $80

FV = $1,000

Substituting the values in formula:

=-pv(8.27%,9,80,1000)

PV or Stock Price or Present Value = $983.32