Need help on calculating Yield to Call

Business & Finance
Tutor: None Selected Time limit: 1 Day

What is the yield to call of a 20-year to maturity bond that pays a coupon rate of 9.03 percent per year, has a $1,000 par value, and is currently priced at $791? The bond can be called back in 8 years at a call price $1,078. Assume annual coupon payments.

Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)

You should use Excel or financial calculator.

I used the Rate formula on excel, but I can't seem to get the right numbers

Sep 9th, 2015

Thank you for the opportunity to help you with your question!

YTC.xlsx   here it is.. message me if your have more questions.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Sep 9th, 2015

How did you calculate the call premium (7.80%)? 

Sep 9th, 2015

The call premium is the percent increase over the bond's face value which is paid by the issuing company to exercise their call option.

Call Premium = [(1078 - 1000)/1000]*1000

Call Premium = 0.078 or 7.8%

Sep 9th, 2015

*Call Premium = [(1078 - 1000)/1000]*100

Correction 

Sep 9th, 2015

Thank you so much! This helped me a lot! 

Sep 9th, 2015

welcome.... just contact me for accounting homework. :)

Sep 9th, 2015

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Sep 9th, 2015
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