This is an IRR problem, solve for semi-annual IRR, then multiply by 2 for annual IRR...
your cash flows "CF" are...
CF0 : -1,137
CFs 1 - 43: 1,000 (assumed par value) * 0.097/2 = 48.50
CF 44: last coupon + par paid at maturity: 1,048.50
semi-annual IRR: 4.1657%
annual IRR: 2 * 4.1657% = 8.33141%
Sorry, no time to answer the second question. Will try to get back to you later.
How do I calculate the Coupon Rate and the YTM for each question?
1. BDJ Co. wants to issue new 22-year bonds for some much-needed expansion projects. The company currently has 9.7 percent coupon bonds on the market that sell for $1,137, make semiannual payments, and mature in 22 years
What coupon rate should the company set on its new bonds if it wants them to sell at par?
2. Crossfade Co. issued 14-year bonds two years ago at a coupon rate of 8.7 percent. The bonds make semiannual payments.
If these bonds currently sell for 111 percent of par value, what is the YTM?
