Ten years ago the Templeton Company issued 26year bonds with

Ten years ago the Templeton Company issued 26-year bonds with an 9% annual coupon rate at their $1,000 par value. The bonds had an 6% call premium, with 5 years of call protection. Today Templeton called the bonds.

Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.

%

Solution

N = 10, FV = 1060, PV = -1000, PMT = 90

use rate function in Excel

realized rate of return = 8.10%