Springfield Nuclear Energy Inc

Finance Aug 07, 2020

Springfield Nuclear Energy Inc. bonds are currently trading at $1.025.01. The bonds have a face value of $1.000. a coupon rate of 8% with coupons paid annually, and they mature in 20 years. What is the yield to maturity of the bonds? The yield to maturity of the bonds is El% (Round to two decimal places.)

Expert Solution

We can calculate the yield to maturity by using the following formula in excel:-

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

Here,

Rate = Yield to maturity

Nper = 20 periods

Pmt = Coupon payment = $1,000*8% = $80

PV = $1,025.01

FV = $1,000

Substituting the values in formula:

= rate(20,80,-1025.01,1000)

= 7.75%

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