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Assume a zero-coupon bond that sells for $347 and will mature in 15 years at $1,100. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
What is the effective yield to maturity? (Assume annual compounding. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Appendix Present value of $1. PV PV=Fv1 Period 0 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0 2% 0.980 0.961 0.942 0.924 0.906 0.88B 0.871 0.853 0.837 0.820 0.804 0.788 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.582 5% 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.467 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 587 0.570 0.554 0.478 0.412 0.307 .228 0.896 0.887 0.879 0.870 0.861 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0 650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456 0.375 0.308 0.208 0.141 Percent 6% 7% 0943 0.935 0.890 0.873 0.840 0.816 .792 0.763 0.747 0.713 0.705 0.666 0.665 0.623 0.627 0592 0.544 0.558 0.508 0.527 0.475 0.497 0.444 0.469 0.415 0.442 0.388 0.417 0.362 0394 0.339 0.371 0.317 0.350 0.296 0.331 0.277 312 0.258 0.233 0.184 0.174 0.131 0097 0.067 0.054 0.034 8% .926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215 0.146 0.099 0.046 0.021 9% 0.917 0.842 0.772 0.708 0.650 0.596 0547 0.502 0.460 0.422 0.388 0.356 0.326 999 0.275 0.252 0.231 0.212 0.194 0.178 0.116 0.075 0.032 0.013 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 11% 0.901 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.391 0.352 0.317 0.286 0.258 0.232 0.209 0.188 0.170 0.153 0.138 0.124 0.074 0.044 0.015 0.005 12% 0.893 0.797 0.712 0.636 0.567 0.507 0 452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.059 0.033 0.011 0.003 0.853 0458 0.844 0.436 0.180 0.758 0.743 0.728 0.714 0.7000 0.686 0.673 0.610 0.552 0.453 0.372 0 0.836 0.828 0.820 0.780 0.742 0.672 0.608 0 0.416 0.396 0.377 0.295 0.231 142 0.087 0.164 0.149 0.092 0.057 0.022 0.009 Appendix (concluded) Present value of $1 Period 17% 0.855 0.731 0624 0.534 0 0456 0390 0.352 0 13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.141 0.125 0.111 0.098 0.087 0.047 0.026 0.008 0.002 14% 15% 0.877 0.870 0.769 0.756 0.675 0.658 0.592 0.572 0.519 0.497 0.456 0.432 0.400 0.376 0.376 0.351 0.327 0.308 0.284 0.270 0.247 0.237 0.215 0.208 0.187 0.182 0.163 0.1600.141 0.140 0.123 0.123 0.107 0.1080.093 0.095 0.081 0.003 0.070 0,073 0.061 0.038 0.030 0,020 0,015 0.005 0.004 0.001 0.001 16% 0.862 0.743 .641 0.552 0.476 0410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.080 0.069 0.060 0.051 0.024 0,012 0.003 0.001 0.285 0.243 0.208 0.178 0.152 0 130 0.111 0.095 0.081 0.069 0.059 0.051 0.043 0.020 0009 0.002 0 Percent 18% 19% 0.847 0.840 0.718 0 .706 0.609 0.593 0.515 0.499 0.437 0.4.19 0.370 0.314 0.296 0.266 0.249 0.225 0.209 0.1910 .176 0.162 0.148 0.137 0.124 0.116 0.104 0.099 0.008 0.084 0.074 0.071 0.062 0.060 0.052 0.0510.044 0.043 0.037 0.037 0.031 0.016 0.013 0.007 0.005 0.001 0.001 0 0 20% 25% 30% 35% 40% 0.8330 .800 0 .769 0.741 0.714 0.694 0.640 0.592 0.549 0.510 0.579 0 .512 0.455 0.406 0.364 0.482 0.410 0.250 0.301 0.280 0.402 0.329 0269 0.223 0.186 0.335 0262 0207 0.165 0.133 0.279 0.210 0.159 0.122 0.095 .233 0.168 0.123 0.091 0.068 0.194 0.134 0.094 0.067 0.048 0.162 0.107 0.073 0.050 0.035 0.135 0.086 RA0056 0.037 0.025 0.112 0.069 0.043 0.027 0.018 0.093 0055 0.033 0.020 0.013 0.078 0.044 0.025 0.015 0.009 0.065 0.035 0.020 0.0110.006 0.054 0.028 0.008 0.005 0.0450.023 0.012 0.006 0.003 0.038 0.018 0.0090.005 0.002 0.031 0.014 14 0007 0.003 0.002 0.026 0.012 0005 0.002 0.001 0.010 0004 0.001 0.001 0 0.004 0.0010 0 0 0.001 0 0 0 0 0 0 0 0 0 50% 0.667 0.444 0.296 0.198 0.132 0.089 0059 0.029 0.026 0.017 0.012 0.008 0.005 0.003 0.002 0.002 0.001 0.001 0 0 0.015 0 30 .... 0 0 0
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