Theo has been assigned the task of determining the cost of capital for

Theo has been assigned the task of determining the cost of capital for his division of the firm. His first step is to determine the cost of debt.

The firm has $1,000 par value bonds outstanding that have an annual coupon rate of 8.00% and make semiannual payments. These bonds have twenty-three years remaining to maturity and currently sell for $1,133.42. What is the yield-to-maturity on these bonds? Use a financial calculator to determine your answer.
What will be an ideal response?

ANSWER

Answer: Mode = P/Y = 2; C/Y = 2
Input 46 ? -1,133.42 40 1,000
Key N I/Y PV PMT FV
CPT 6.84%