You have a fixed payment loan, you know the quantity you need to pay every year, the years until maturity and (I suppose to) the loan value and you need to calculate which is the yield to maturity.
Loan Value =Fp/(1+i) + Fp/(1+i)2+....+ Fp/(1+i)n
Fp= Fixed payment annually, in this case it is 85,81$
i = Yield to maturity
n= number of years, in this case it´s 25 years.
The Attempt at a Solution
I found that equation in an economics book, all previous problems use a loan value of 1000 so I´m assuming in this case is the same, unfortunately the writer of the book doesn´t say it explicitly.
The point is that he says that the solution to that equation is yield to maturity i=7%, and I wonder how did he arrived to that conclusion because I see a polynomial with degree 25 that I could solve using mathematica but obviously I get 25 solutions to that equation that satisfy the equality.
Any ideas about how has he arrived at the conclusion that i must be 7%?