Instructions:

1. Prepare a bond issue that includes the following information:

a. The issue and expiration date.

b. Face value

c. The nominal interest rate

d. The effective interest rate

e. Name of the issuing corporation that will be your name.

The company uses calendar year for closing of books. Interest is payable twice a year

(June 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 interest method

cash. The table must have the following elements:

Date

Interest Payment

Interest Expense

Amortization of premium or discount

Book value of the bonds

Place the cursor under the Bond Book Value column, first row, and follow steps 1 through 8.

A .Using the information above enter Excel and search for the following:

Step 1 In the function bar press the symbol "fx" .

Step 2 In the " Function Category " column , select " Financial."

Step 3 In the column of "Function Name" select "PV" press "Next".

Step 4 On the rate line, write the market interest rate.

Step 5 On the "Nper" line write down the number of periods.

Step 6 On the "pmt" line enter the interest payment to be made, remember to use the rate

nominal interest of the bond. Remember that the problem is bond issuance, so

both interest payments represent negative cash flows. The amount of

payment must be entered as a negative number.

Step 7 On the fv line enter 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 down anything, the machine will understand that it is

of an ordinary annuity. This will be the sale price of the bond, since the program

Finds the present value of the annuity and adds it to the present value of the amount.

B. In the first column enter the payment dates June and December of each year, the program fills in the

column after placing the first dates and creating a sequence.

C. In the second column you will put the interest payment that will be the same every six months. For

compute this should 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 because the value in

books change. Use the formula commands to calculate the formulas.

E. In the fourth column determine the amortization of the premium or the discount, this is obtained by subtracting the

figure from column three and four.

F. In the fifth column, add the result of column four to the previous balance of the column if the

bond was sold at a discount or column four will be subtracted if the bond was sold

with cousin. (Use the formula commands for this process.)

3. It should 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 / Show Formulas

c. Use the Keyboard: Ctrl and the key on the left that has these signs: ~ and `