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A 15-year, 12% semiannual bond sells for $1153.72. What's Rd (yield), or return required from the...

A 15-year, 12% semiannual bond sells for $1153.72. What's Rd (yield), or return required from the investors; or what is the cost the firm pays to the bond holders?

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Answer #1

using excel RATE function

cost of firm YTM = RATE(number_of_periods, payment_per_period, present_value, [future_value], [end_or_beginning], [rate_guess]) * number of compounds

= RATE(30,120/2, -1153.72, 1000) * 2

= 10%

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