To determine a bond's yield to maturity, an internal rate of return must be calculated. Consider the case of a bond issue with a 10% coupon rate, a par value of $1,000,000, and a maturity of five years. The YTM is calculated from the investor's perspective. 0 2 3 4 5 End of Year Cash Flows ($000s) Bond Purchase Coupon Payments Bond Sale (1,000) 100 100 100 100 100 1,000 The IRR= YTM = 10%