Bond-YTM-IRR-RYTM-MIRR-Example

# Bond-YTM-IRR-RYTM-MI - 5 You think you will be able to Reinvest the Coupons at 7.00 The result is a YTM/IRR of 5.00 and a Realized YTM/MIRR of 5.18

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Year Event, etc. Amount Discussion 0 Purchase -\$1,069.50 1 Coupon \$50.00 2 Coupon \$50.00 3 Coupon \$50.00 4 Coupon \$50.00 5 Coupon + Maturity \$50.00 6 Coupon \$50.00 7 Coupon \$50.00 8 Coupon \$50.00 9 Coupon \$50.00 10 Coupon \$50.00 11 Coupon \$50.00 12 Coupon \$50.00 13 Coupon \$50.00 14 Coupon \$50.00 15 Coupon \$1,050.00 16 Coupon 17 Coupon 18 Coupon 19 Coupon 20 Coupon + Maturity YTM/IRR % 4.36% LEGEND: Reinvest Rate % 4.00% Enter data RYTM/MIRR % 4.27% Value calculated YTM/IRR: =IRR(C2:C22) Format two decimal points. RYTM/MIRR: =MIRR(C2:C22,C23,C24) Format two decimal points. Example . You purchase a Bond in Year 0 at Cost of \$1,000.00. The Coupon is \$50.00 per year. You hold the Bond for five (5) years and when it Matures at \$1,000.00 you also get the \$50.00 Coupon or \$1,050.00 in Year
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Unformatted text preview: 5. You think you will be able to Reinvest the Coupons at 7.00%. The result is a YTM/IRR of 5.00% and a Realized YTM/MIRR of 5.18%. Compute YTM first, then RYTM. Notes. In this Example Years 6-20 are left blank. If the Bond were to mature in Year 10, then Years 1-9 would have the Coupon of \$50.00 and Year 10 would have the Coupon + Maturity number of \$1,050.00. The Spreadsheet stops at 20 years which is why Year 20 has "Coupon + Maturity." You can add years through the "Insert" Command with the final year always having the "Coupon + Maturity" value. A B C D E F G H I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28...
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## This note was uploaded on 04/19/2011 for the course FIN 3300 taught by Professor Sherbo during the Spring '11 term at Denver.

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