A corporation sold a 30-year bond with a coupon rate of 8% (4% semiannually) two years ago. The bonds are callable at 105% of par value 5 years after issue and 103% of par value 10 years after issue. The bonds are currently priced at 120% of par value. Calculate the yield to call after 5 years, after 10 years, and the yield to maturity.
What I have done is for YTC5years, I discounted 40 using PV annuity formula using 6 periods + 1050/(1+i)^6 and got i=0.013, which gives YTC5years as 2.64%. AM I on the right track?
If I am then I can do the rest. Thanks!
I used goal seek in EXCEL to solve for yield to call 1, yield to call2 and yield to maturity. Cells that are colored are the answers. Goodluck
Satish