Welcome to JustAnswer!
Yield to Maturity is 7.098%.
Please download HERE for the computation.
If you found my answer helpful, please click the Accept button.
Thank you so much! :)
I already answered this.
Do you have clarification question? Or do you wish an alternative way of computation?
I think I have to teach you the fastest way of computation but you have to be familiarize with the "terms" used.
Nper = Number of Period
Pmt = Interest payment (Face Value of Bond x Interest rate)
PV = selling price of the bond (should be written as negative figure)
FV = Face value of bond
In this problem, we got
Nper = 7 years
Pmt = $1,000 x 4 3/8% = $1,000 x 4.375% = $43.75
PV = $853.75, we should write this as -$853.75 for computation purpose only.
FV = $1,000
Now, using the excel formula,
Plug in the values
If you copy and paste this =rate(7,43.75,-853.75,1000) to excel, it will give you the computation for the yield to maturity.
I hope this helps.