SOLUTION: A Php 100,000, 10% bond, pays a dividend every quarter for 8 years. The bond is priced at par and is redeemable at 110% of the par value. Find the yield to maturity.

Question 1179442: A Php 100,000, 10% bond, pays a dividend every quarter for 8 years. The bond is priced at par and is redeemable at 110% of the par value. Find the yield to maturity.
Answer by mananth(16946) (Show Source): You can put this solution on YOUR website!
A Php 100,000, 10% bond, pays a dividend every quarter for 8 years. The bond is priced at par and is redeemable at 110% of the par value. Find the yield to maturity.
Principal P = 100000
Amount= A
years=t 8.00
compounded 4 times a year n
Rate = 10.00 0.1 0.025
Amount = P*((n+r)/n)^n*t

Amount = = 100000 *( 1 + 0.025 )^ 4 * 8.00
Amount = 100000 *( 1 + 0.025 )^ 32
100000 *( 1.025 )^ 32
Amount = 220375.69

Interest = 220375.69 -100000 =$120,375.69
120,375.60+10,000 =130,375.69
(130375.69/220375.69)*100 = 59.16%

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