Principles of Corporate Finance

Debt & Risk

Example (Bond 1)

Calculate the duration of our 10.5% bond @ 8.5% YTM

Year CF PV@YTM % of Total PV % x Year
1 105 96.77
2 105 89.19
3 105 82.21
4 105 75.77
5 1105 734.88
1078.82