spartan1

Hi SharpeCFA,
I assume you are using TI BA II plus,here is the calculation:
you already have the equation for PV of the Bond :
1,100= 80/(1.05)+ 80/(1.06)^2 + 1,080/(1 + 3year spot rate)^3
=>952.63=1080/ (1 + 3year spot rate)^3 let 3year spot rate=X
=>(1+X)^3=1080/952.63
=>(1+X)=(1.1337)^1/3 (cube root of 1.1337)
=>1.1337 press [Y^X] press [(] enter [1/3] press [) ]press [=]
=>1.0427 here’s the answer
Hope I made it clear.
Cheers
Dhruv