Chapter_07

# Chapter_07 - Ross Westerfield and Jordan's Spreadsheet Master Fundamentals of Corporate Finance 9th edition by Brad Jordan and Joe Smolira Version

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by Brad Jordan and Joe Smolira Version 9.0 Chapter 7 In these spreadsheets, you will learn how to use The following conventions are used in these spr 1) Given data in blue 2) Calculations in red NOTE: Some functions used in these spreadsheets may the "Analysis ToolPak" or "Solver Add-In" be installed in To install these, click on the Office button then "Excel Options," "Add-Ins" and select "Go." Check "Analysis ToolPak" and "Solver Add-In," then click "OK." Ross, Westerfield, and Jordan's Spreadsheet Master Fundamentals of Corporate Finance, 9th edition PRICE YIELD DURATION MDURATION COUPDAYSNC ACCRINT HLOOKUP Scroll bars

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e the following Excel functions: readsheets: y require that in Excel.
Chapter 7 - Section 1 Bonds and Bond Valuation Coupon rate: 8.00% Years to maturity: 10 Yield to maturity: 7.50% Par value: \$1,000 Since the bond has semiannual payments, the coupon payments will be: Coupon payments: \$40.00 Now we can find the present value of the coupon payments, the present value of par, and t Present value of coupon payments: \$555.85 Present value of par: 478.89 Bond price: \$1,034.74 Of course, we could have simply entered the coupon payments and par value in the same P Bond price: \$1,034.74 Although you can value a bond with the PV function, Excel has numerous functions that ca What is the price of a bond with the following characteristics? Settlement date: 1/1/2000 Maturity date: 1/1/2010 Annual coupon rate: 7.50% Yield to maturity: 8.40% Face value (% of par): 100 Coupons per year: 2 Bond price (% of par): 93.991 RWJ Excel Tip To calculate a bond price, we can use the PRICE function as follows: As with any financial instrument, the price of a bond is just the present value of the future c following characteristics?

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Dollar price of bond: \$939.91 Settlement Date Finding the YTM You can use the YIELD function in Excel to calculate the yield to maturity of a bond. Suppo Settlement date: 1/1/2000 Maturity date: 1/1/2015 Annual coupon rate: 6.80% The PRICE function uses several arguments we need to explain. Notice, we had to enter 2 pay for the bond. The maturity date is the date the bond matures. In many bond problems, case, any 2 dates will work as long as they are the correct number of years apart. In this c since these dates are particularly easy to work with. Rate is the coupon rate of the bond an par) value of the bond at maturity as a percentage of par. When you read further about bon convention. Frequency is simply the number of coupon payments per year. Notice that the return the dollar price, we could simply multiply this entire function by 10, and format the ce price for the bond. Excel uses the Settlement Date in its bond pricing functions. The settlement date is not the actually made. If you purchase a Treasury bond, you will not actually pay for the bond unti the date of purchase, the same time frame that is used for stock purchases.
Bond price (% of par): 107.850 Face value (% of par): 100 Coupons per year: 2

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## This note was uploaded on 06/16/2011 for the course FIN 521 taught by Professor Varney during the Spring '11 term at Andrew Jackson.

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Chapter_07 - Ross Westerfield and Jordan's Spreadsheet Master Fundamentals of Corporate Finance 9th edition by Brad Jordan and Joe Smolira Version

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