That is close, but it is not correct and it is not "close enough." The reason that it won't work is because the formula used by the PV function assumes that the interest payments are an annuity.
Using the principle of value additivity, we know that we can find the total present value by first calculating the present value of the interest payments and then the present value of the face value.That means that you cannot get the correct answer by entering fractional periods (e.g.,.5) into the PV function for the NPer argument.Open Office Calc ).Note that interest accrues equally on every day during the period.Excel has a function called Price that can calculate the clean price of a bond on any date.Assume that interest rates have not changed.Notice that the value of the bond has increased a little bit since period.So, we calculated the value as of the previous coupon payment date, and then calculated the future value of that price.
Note that the dates must be valid Excel dates, but they can be formatted any way you wish.
To convert this to an actual dollar amount, simply enter this formula in B12: registered sex offenders junction city ks B11/100*B2 Now, you can see that the bond price (assuming that 9/15/2007 is a payment date) is 961.93.
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The face value is a 1,000 lump sum cash flow.
Using the same bond as above, what will the value be after 3 months have passed in the current period?We can calculate the present value of the cash flows using the PV function, but we first need to set up our worksheet.The purpose of this section is to show how to calculate the value of a bond, both on a coupon payment date and between payment dates.Instead, the issuance date is written on the note contract along with the note period.That is, the invoiced price is the"d price plus accrued interest.Now, is there another way that we might arrive at that period 1 value?For example, if 2 months (out of 6) have elapsed, then the fraction is 1/3.The bond must be worth exactly 1,000 at maturity because that is how much it will pay at that time.We can use exactly this same procedure to find the value of the bond in-between payment dates.Remember that this gives us the "dirty" price of the bond (it includes the accrued interest).
Please note that this tutorial works for all versions of Excel, including Excel 2007.