2nd pic is the hint

thanks!

$18 O Bavarian Pretzel Haus is going to finance a new pretzel factory using a debt issue. The company needs to raise $9.00 million today. An investment bank has suggested issuing 10-year bonds, with a 7.00% APR semi-annual coupon, and a face value of $14.00 million. What yield to maturity is the investment bank placing on Bavarian Pretzel Haus bonds if they offer with these terms (Express as an EAR)? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) Show Hint Tigo Tan Bavarian Pretzel Haus is going to finance a new pretzel factory using a debt issue. The company needs to raise $10 million today. An investment bank has suggested to issue 10-year bonds, with a 6% APR semi-annual coupon, and a face value of $11 million. What yield to maturity is the investment bank placing on Bavarian Pretzel Haus bonds if they offer with these terms (Express as an EAR)? SOLUTION: Coupon CPN = = Bond Price = PV of Bond Cash Flows _ CPN X (1-( + y)) + CPT 1/Y=3.65% every 6 months USING EXCEL: Po =RATE(20,0.33,-10,11,0)=3.65% APR%x Face Value 6.00%x$11 m 2 Face Value (1+y)N' USING FINANCIAL CALCULATOR: N 1/Y PV 20 ? PMT FV 0.33 11 -10 N' = Nxm= 10x2= 20 coupons remaining $10= =$0.33 million per 6 months 20 - 50.33 x (1-( + y) ) + 1 y' 0.0365 3.65% m y = (1+1PR) - 1 = (1+y) - 1 = (1.0365) - 1 y = 0.0743= 7.43% $11 (1+y)20