Financial Technology Center - School of Business - Central Connecticut State University

Palmer Products has outstanding bonds with an annual 8 percent coupon. The bonds have a par value of $1,000 and a price of $865.  The bonds will mature in 11 years.  What is the yield to maturity on the bonds?

Inputs:

N = 11 *  1 .
PV= $865
PMT = ( Par Value * The coupon rate) / F = ( 1000 * 0.08 ) / 1 = 80.
FV= 1000 .

Financial calculator solution

Output:
the yield to maturity = I = 0.1008668 = 10.0868% .