Question
the present value (PV) of a future cash flow (CF) to be received n years from today with an applicable interest (discount) rate (i) can
the present value (PV) of a future cash flow (CF) to be received n years from today with an applicable interest (discount) rate (i) can be determined using the following equation: PV Formula.png Mathematically, we can then solve for the interest (discount) rate (i) on a discount bond as follows: Solve for i on Discount Loan.png Although the textbook example performed the yield-to-maturity on a one-year zero-coupon bond, we are obviously able to perform this same calculation using the above equation on a multi-year zero-coupon bond as well. Assuming a borrower purchases a two-year zero-coupon bond with a face value of $1,000 for $873.43, what is bond's yield-to-maturity?
(State your solution in percentage form rounded to the nearest percent.)
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