00:01
Here we're taking an example of a simple loan and we're trying to determine exactly what its yield to maturity is.
00:06
So we are given that it's a $1 ,500 simple loan with a required repayment of $15 ,000 in five years.
00:13
I've written down here what our present value function is in this case and it's that it is cash flow divided by one plus our yield to maturity to the power of whatever time to maturity we have.
00:24
So let's start by identifying what some of these variables are.
00:27
So we can see from this that our present value is equal to 1500.
00:32
Right, that was given to us right up here by telling us that it's a $1 ,500 simple loan.
00:38
We have a cash flow, which is going to be equal to $15 ,000.
00:43
Get one right here.
00:46
Our yield to maturity, that's what we're trying to find.
00:48
So we don't have i quite yet...