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6. Six years ago, Bradford Community Hospital issued 20-year municipal bond with 7 % annual coupon rate. The bonds were called today for a $70 call premium- that is, bondholders received $1,070 for each bond. What is the realized rate of return for those investors who bought the bonds for $1,000 when they were issued

Respuesta :

Answer:

7.96%

Explanation:

We have to use the RATE formula that is shown in the spreadsheet.

Provided that,  

Present value = $1,000

Assuming figure - Future value or Face value = $1,070

PMT = 1,000 × 7% = $70

NPER = 6 years

The formula is shown below:  

= Rate(NPER,PMT,-PV,FV,type)  

The present value come in negative  

Therefore, the realized rate of return is 7.96%

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