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Compute the realized rate of return for investors

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Reference no: EM131980985

Seven years ago, Goodwynn & Wolf Incorporated (G&W) sold a 20-year bond issue with a 14% annual coupon rate and a 9% call premium. Today, G&W called the bonds. The bonds originally were sold at their face value of $1,000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price.

Please do not show the calculator key strokes nor the excel formula. I would like to see the formula worked out. The answer worked out in excel would be ideal (i.e. do not use the rate function).

Reference no: EM131980985

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