Question

A N=2 year $2000 6% bond with quarterly coupons has redemption value $2050. It is purchased...

A N=2 year $2000 6% bond with quarterly coupons has redemption value $2050. It is purchased to yield 5% convertible quarterly. Construct a bond amortization table for the n = 8 quarters. (Show Steps in Excel)

Hint: show first that purchase price is P = 2083.11 (rounded).

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Homework Answers

Answer #1
n = 8
I = 1.25%
Cashflows Amount PVF Present value
Quarterly Interest 30 7.56812 227.0436
Maturity value 2050 0.905398 1856.066
Price of bonds 2083.11
Amort Chart
Period Payment Int expense Premium Carrying
Amortized Value
0 2083.11
1 30.00 26.04 3.96 2079.15
2 30.00 25.99 4.01 2075.14
3 30.00 25.94 4.06 2071.08
4 30.00 25.89 4.11 2066.97
5 30.00 25.84 4.16 2062.80
6 30.00 25.79 4.21 2058.59
7 30.00 25.73 4.27 2054.32
8 30.00 25.68 4.32 2050.00
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