Instructions: 1. Prepare a following bond issue that includes the information: A. The issue and expiration date. B. The nominal value C. The nominal interest rate D. The effective interest rate me. C. Name of the issuing corporation (make it up).

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 that will 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 "Type" line, it is not necessary to write anything down, 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. En la primera columna coloque las fechas de pago junio y diciembre de cada ao, el programa llena la columna despus de colocar las primeras fechas y crear una secuencia.

C. En la segunda columna colocar el pago de inters que ser el mismo cada seis meses. Para computar esto debe utilizar la tasa de inters semi-anual nominal.

D. En la tercera columna colocar el gasto de inters que ser distinto cada seis meses pues el valor en libros cambia. Utilice los comandos de frmulas para calcular los mismos.

E. En la cuarta columna determine la amortizacin de la prima o el descuento, sto lo obtiene restando la cifra de la columna tres y la cuatro.

F. En la quinta columna sumar el resultado de la columna cuatro al balance anterior de la columna si el bono se vendi con descuento o se le restar el resultado de la columna cuatro si el bono se vendi con prima. (Use los comandos de frmulas para este proceso).

3. It should show the formulas used.

This can be achieved under any of the following alternatives: to.

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 `