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A. В E F 1 On January 1, Ruiz Company issued bonds as follows: 2 Face Value: 3 Number of Years: 4 Stated Interest Rate: 5 Interest payments per year 6 (Note: the bonds pay interest annually.) $ 500,000 30 7% 1. 7 8 Required: 9 1) Given the different market interest rates below, calculate the following items. 10 Calculate the bond selling price USING THE EXCEL PV FUNCTION (fx). Note: Enter all 11 function arguments as cell references. 12 13 a) Market Interest Rate: 9% 14 Annual Interest Payment: 15 Bond Selling Price: 16 17 b) Market Interest Rate: 5.5% 18 Annual Interest Payment: 19 Bond Selling Price: 20 21 2. Use the Excel IF function to answer either "Premium" or "Discount" to the following items. 22 23 The bond in (a) sold at a: 24 The bond in (b) sold at a:

A. В E F 1 On January 1, Ruiz Company issued bonds as follows: 2 Face Value: 3 Number of Years: 4 Stated Interest Rate: 5 Interest payments per year 6 (Note: the bonds pay interest annually.) $ 500,000 30 7% 1. 7 8 Required: 9 1) Given the different market interest rates below, calculate the following items. 10 Calculate the bond selling price USING THE EXCEL PV FUNCTION (fx). Note: Enter all 11 function arguments as cell references. 12 13 a) Market Interest Rate: 9% 14 Annual Interest Payment: 15 Bond Selling Price: 16 17 b) Market Interest Rate: 5.5% 18 Annual Interest Payment: 19 Bond Selling Price: 20 21 2. Use the Excel IF function to answer either "Premium" or "Discount" to the following items. 22 23 The bond in (a) sold at a: 24 The bond in (b) sold at a:

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. Calculate the price of a bond using the Excel PV function. Bond Pricing - Excel FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In fx Calculate Now Calculation a Calculate Sheet Function Defined Formula Library Names Auditing Options Calculation B14 fe A B D E F G 1 On January 1, Ruiz Company issued bonds as follows: 2 Face Value: 3 Number of Years: 4 Stated Interest Rate: 5 Interest payments per year 6 (Note: the bonds pay interest annually.) $ 500,000 30 7% 7 8 Required: 9 1) Given the different market interest rates below, calculate the following items. 10 Calculate the bond selling price USING THE EXCEL PV FUNCTION (fx). Note: Enter all 11 function arguments as cell references. 12 13 a) Market Interest Rate: 9% 14 Annual Interest Payment: 15 Bond Selling Price: 16 17 b) Market Interest Rate: 5.5% 18 Annual Interest Payment: 19 Bond Selling Price: 20 21 2. Use the Excel IF function to answer either "Premium" or "Discount" to the following items. 22 23 The bond in (a) sold at a: 24 The bond in (b) sold at a: Sheet1
Transcribed Image Text:1. Calculate the price of a bond using the Excel PV function. Bond Pricing - Excel FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Sign In fx Calculate Now Calculation a Calculate Sheet Function Defined Formula Library Names Auditing Options Calculation B14 fe A B D E F G 1 On January 1, Ruiz Company issued bonds as follows: 2 Face Value: 3 Number of Years: 4 Stated Interest Rate: 5 Interest payments per year 6 (Note: the bonds pay interest annually.) $ 500,000 30 7% 7 8 Required: 9 1) Given the different market interest rates below, calculate the following items. 10 Calculate the bond selling price USING THE EXCEL PV FUNCTION (fx). Note: Enter all 11 function arguments as cell references. 12 13 a) Market Interest Rate: 9% 14 Annual Interest Payment: 15 Bond Selling Price: 16 17 b) Market Interest Rate: 5.5% 18 Annual Interest Payment: 19 Bond Selling Price: 20 21 2. Use the Excel IF function to answer either "Premium" or "Discount" to the following items. 22 23 The bond in (a) sold at a: 24 The bond in (b) sold at a: Sheet1
Expert Solution
Step 1 What is bond price?

The bond price of a bond is the current worth of a bond on the basis of the present value of all the cash flows a bond may generate in its lifetime assuming to be held till maturity. It is calculated from the formula,

Bond value=coupon×1-(1+r)-nr+RV (1+r)n

r = required rate

n = number of periods till maturity

RV = redemption value 

 

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