What is the value of a bond that has a par value of $1,000, a coupon rate of 10.86 percent (paid annually), and that matures in 14 years? Assume a required rate of return on this bond is 9.65 percent.
How do I do this in Excel?
| Value of bond is the present value of cash flow from bond which is calculated as follows: | |||||||||
| Value of a bond | =-pv(rate,nper,pmt,fv) | ||||||||
| = $ 1,090.86 | |||||||||
| Where, | |||||||||
| rate | = | Discount rate | = | 9.65% | |||||
| nper | = | Number of period | = | 14 | |||||
| pmt | = | Coupon | = | 1000*10.86% | = | $ 108.60 | |||
| fv | = | Face Value | = | $ 1,000.00 | |||||
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