Problem:

Blue Water Homes has 8 percent bonds outstanding that mature in 13 years. The bonds pay interest semiannually. These bonds have a par value of $1,000 and are callable in 2 years at a premium of $75.

Required:

Question: What is the yield to call if the current price is equal to 103.25 percent of par?

• 8.06 percent
• 7.51 percent
• 8.98 percent
• 9.66 percent
• 7.70 percent

Note: Please provide equation and explain comprehensively and give step by step solution.