I am creating a worksheet for a "bond calculator" as assigned. I have calculated Price using the PV formula, Interest on Interest plus Coupon using the FV formula, and expected price at the end of Investment Horizon. I am asked to compute total future dollars but I am not sure if this is the same as expected price at the end of I/H or if this is the sum of the expected price and the interest on interest and coupon. I have currently input it as the sum of Interest on interest and coupon, and expected price at the end of I/H but I need to be sure because I have to go on to use in in the rate formula for Horizon Return and then make some tables... the numbers I have are as follows:
Coupon Rate: 8%
Par Value: $1,000
Term to maturity: 30 years
periods per year: 2
yield to maturity: 10%
Holding period: 10 years
reinvestment rate: 6%
expected yield at the end of I/H: 9%
I have calculated:
Price: $810.71
Interest on interest plus coupon: $6,522.14
Expected price at the end of I/H: $907.99
Total Future Dollars: $7,430.13
Horizon Return: 23%
Any help is appreciated
Robert