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You bought a bond five years ago for $935 per bond. The bond is now selling for $980. It also paid $75 in interest per year, which you reinvested in the bond. Calculate the realized rate of return earned on this bond. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Respuesta :

Answer:

8.83%

Explanation:

For this question, we use the Rate formula which is shown in the attached spreadsheet

Given that,  

Present value = $935

Future value or Face value = $980

PMT = $75

NPER = 5 years

The formula is shown below:  

= Rate(NPER,PMT,-PV,FV,type)  

The present value come in negative  

So, the  realized rate of return earned on this bond is 8.83%

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