The Government of Colombia plans to issue a bond with a face value of $10,000,000. Given that the Banco de la Repblica has just raised interest rates to 5%, the Ministry of Finance considers that in order to make the bond attractive, it must pay a fixed coupon rate of at least 6.5% EA (with annual payments).

The bond will have a maturity of 10 years and it is believed that the market opportunity interest rate today is

also of 5%, and that it will remain constant during the 10 years.

1. What will be the estimated cash flow for this bond?

two

2.What is the estimated price of this bond in the market on the day it is issued? Calculate said value by means of a manual Excel formulation and by means of predetermined formulas (price;VA;VAN)