10- 13.17 I need help correcting my mistakes You are analyzing the cost of debt

Question

10- 13.17 I need help correcting my mistakes

You are analyzing the cost of debt for a firm. You know that the firm's 14-year maturity, 7.0 percent coupon bonds are selling at a price of $653.03. The bonds pay interest semiannually. If these bonds are the only debt outstanding for the firm, answer the following questions. What is the current YTM of the bonds? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) Current YTM for the bonds %

Explanation / Answer

For this , use financial calculator

now PV=-653.03 being current price

FV=1000 ,maturity value

N=14*2=28 periods

PMT=1000*7%/2=35 semi annual interest recived

now press CPT

Then look for 1/Y=6.12% *2=12.24% is the YTM

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