Determining Bond Value

largirl · #1 Sep 19, 2007, 01:09 PM

Here is the problem: The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years, and Bond S a maturity of 1 year.

a. What will be the value of each of these bonds when the going rate of interest is (1) 5% (2) 8% and (3) 12%? Assume that there is only one more interest payment to be made on Bond S.

My question is which formula do I use in Excel to figure out the answers? Right now, I am using the PV formula and come up with:

Bond L (1) $1037.97 (2) $855.95 (3) $681.09

Bond S (1) $2000.00 (2) $1250.00 (3) $833.33

I just want to make sure I am using the right formula. I need all the points I can get in this class. Thanks!

Larri



At Ask Me Help Desk you can ask questions in any topic and have them answered for free by our experts. To ask questions or participate in answering them you must register for a free account. By registering you will be able to: Get free answers from experts in any of our 300+ topics. Accept money for answers that you provide. Communicate privately with other members (PM). See fewer ads. Sign Up!