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WSO Free Modeling Series - Now Open Through
May 31, 2024
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
Without a calculator, you can see that the answer is clearly negative: for this to have a positive IRR for the original buyer, the bond must be sold for at least for at least $97 (IRR can only be positive if the undiscounted sum of cash inflows is greater than the undiscounted outflow). A 29-year bond with a 3% coupon does not have a 10% yield unless its price is much lower than 97. A quick check in Excel shows that its price will be ~35, resulting in an IRR of ~(37)% for the original holder.
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