I have this hw problem that I have been working on. I have a check answer of 8.65% but in my attempts to try and solve I have come up with 8.38% and 9.13%. I know Im doing something wrong but can't figure it out. Can someone plese help. I need to wrap this up tonight.

You just purchased a bond that matures in 5 years. The bond has a face value of $1000 and has an 8% annual coupon. The bond has a current yield of 8.21%. What is the bonds yield to maturity?

I'm not coming out with 8.65% either. I even used a bond calculator and came out with 8.39%

Bond Yield Calculator

Doing it manually, I came out with 8.37%, If you want to show your work, I'll see if you are understanding the process.

Here is my latest attempt. Still didn't achieve the check answer given in the text.
Face Value = $1000 Coupon = 8% annually or $80 Current yield = 8.21%
8.21% = ($80 / Price paid for bond) x 100%
(8.21 / 100) = (($80 / Price paid for bond) x 100%) / 100
.0821 = $80/ Price paid for bond
Price paid for bond today= $80 / .0821 = $974.42
YTM = [$80 + ($1000 - $974.42)/5] / ($1000 + $974.42)/2
YTM = 85.116/987.21 = .0862 or 8.62%

Wow - I've been on the computer all weekend working with budgets, etc - too many numbers. I missed the 5 years - somehow used 10 years.

Anyway, you are right just the way you did it. I think it must just be rounding differences.

Thank you

For the benefit of anyone who comes along later, this is how the problem is answered. First you have to find the present value.

annual interest / current yield = PV
80 / 8.21% = $974.42

now solve in Excel

=rate(5,80,-974.42,1000)

Yield to Maturity = 8.65%