Each student must invent a bond issue. This means that you have to decide the principal amount of the bonds, the stated or coupon interest rate, the effective or market interest rate, the maturity date, and the frequency of interest payments.
The name of the entity issuing the bonds will be the name of the student. They should refer to the exercise for specific instructions on preparing the Excel file.
General objective: to strengthen the use of technology. Specific objective: - Use the present value formula function and do mathematical calculations of cells with the Excel program. Instructions: 1. Prepare a bond issue that includes the following information: 1. The date of issue and maturity. 2. Face value 3. The nominal interest rate 4. The effective interest rate 5. Name of the issuing corporation that will be your name. The company uses calendar year for book closing. Interest is payable twice a year (lune 30 and December. 31). This information must be presented in an organized manner. 2. Prepare a table in Excel where the premium or discount is amortized using the effective interest method. The table must have the following elements: Date - Interest payment - Interest expense - Premium or discount amortization - Book value of bonds. Place the cursor under the Value column in the bond books, first row, and follow steps 1 through 8 A. A. Using the above information, go to Excel and search for the following: Step 1. On the function bar press the "f xn symbol. Step 2 - In the "Function Category" column, select "Financiar". Step 3 - in the "Function Name" column select "pV" or press "Next". Step 4- In the "rate" line write down the market interest rate. Step 5- In the "Nper" line note the number of periods. Step 6 - In the line of "pmt" note the interest payment that will be made, remembor to use the nominal interest rate of the bond. Remember that the problem is bond issuance, therefore interest payments represent negative cash flows. The payment amount should be noted as a negative number. Step7. In the "fv" line write down the total face value of the bonds. Remember that for the company the payment of the principal at maturity represents a cash outlay and the amount must be written as a negative number. Step 8 - In the line of "Type" it is not necessary to write anything down, the machine will understand that it is an ordinary annuity. This will be the sale price of the bond, as the program calculates the present value of the annuity and adds it to the present value of the amount. B. In the first column place the June and December payment dates of each year, the program fills the column after placing the first dates and creating a sequence. C. In the second column you will place the interest payment that will be the same every six months. To compute this you must use the nominal semi-annual interest rate. D. In the third column you will place the interest expense that will be different every six months as the book value changes. Use formula commands to calculate formulas. E. In the fourth column, determine the amortization of the premium or discount, this is obtained by subtracting the figure in columns three and four. F. In the fifth column, you will add the result in column four to the previous balance in the column if the bond was sold at a discount or the result in column four will be subtracted if the bonus was sold at a premium. (Use formula commands for this process.) 3. You must show the formulas used. This can be achieved under any of the following alternatives: a. XP version: Tools/Options/Show Formulas b. Windows Vista version: Formulas/Formula Auditing/5how Formulas/ c. Use the Keyboard: Ctri and the left hand key that has these signs: " and
