You have paid $980.30 for an 8% coupon bond with a face value of $1,000 that matures in five years. You plan on holding the bond for one year. If you want to earn a 9% rate of return on this investment, what price must you sell the bond for? Is this realistic?
I got the idea of how to solve it. No problem for the price. Then I would compute the yield to maturity, discounting all fututre cash payments and putting them equal to the price I have paid. Then once known the yirld I can see after one year, which has to be the price of the bond. And see whether it is smaller of higher than the price I need to have a 9%. Conceptually is easy.
My problem is ho do I get the interest rate(the yield) because I have the discounting factor that arrives up to (1+i)^5 !! How do I solve for i ????