Problem:
Alex plans to purchase a callable bond of Horizon Inc. The bond is 20-year to maturity, carry 10.5% annual coupon, paid semi-annually, and have a$1,000 par value. The bond is selling now for $1,187.40 each. The bond can be called back in 5 years at a call price $1,050.50.
Required:
Question: What is the yield to call for these bonds?
Note: Please show how to work it out.