Disney Enterprises issued 7.55% senior debentures (bonds) on July 15, 1993, with a 100-year maturity (i.e., due on July 15, 2093). Suppose an investor purchased one of these bonds on July 15, 2003 for $1,050.

a. Determine the yield to maturity (nearest /100 of 1 percent) using the valuation formula for a bond with a finite maturity (Equation 6.5).

b. Determine the yield to maturity (nearest 100 of 1 percent) using the valuation formula for a perpetual bond (Equation 6.8).

c. Explain why the answers to parts a and b are the same. PO85