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On Januaty 1, Ruiz Company issued bonds as follows: Face Value: Number of Years: Stated Interest Rate: Interest payments per year 500,000 15 796 Required: 1) Calculate the bond selling price given the two market interest rates below. Use formulas that reference data from this worksheet and from the appropriate future or present value table(found by clicking the tabs at the bottom of this worksheet) Note: Rounding is not required Annual Market Rate 996 PV of Face Value: PV of Interest Payments: Bond Selling Price:

b) Annual Market Rate 6.0% Semiannual Interest Payment: PV of Face Value: +PV of Interest Payments: Bond Selling Price: 2. Use the Excel IF function to answer either Premium orDiscount to the following items. The bond in (a) sold at a: The bond in (b) sold at a: 3. Use the Excel PV FUNCTION (fx) to verify the selling prices of the bonds. a Annual Market Rate 9% Bond Selling Price b)Annual Market Rate 696 Bond Selling Price

Please help me with calculating the price of bonds.

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Answer #1

B7 1 (a) face value number of years stated interest rate interest payments per year 5 500,000 15 7% 1 (a) annual market rate 9% 4.5% semi annual market rate 10 semi annual interest payment PV of face value 17,500 $133,500.01 $285,055.55 $418,555.56 + PV of interest payments 12 13 14 15 16 17 18 19 bond selling price 1 (b) annual market rate 6% semi annual market rate semi annual interest payment 17,500 $205,993.38 $343,007.72 5549,001.10 PV of face value PV of interest payments 21 - bond selling price 24 25 26 27 28 29 30 31 32 2 the bond in (a) is sold at a: DISCOUNT the bond in (b) is sold at a PREMIUM 3 (a) Annual market rate 9% Bond selling price $418,555.56 6% $549,001.10 (b) Annual market rate Bond selling price

for formulas and calculations, refer to the image below -

B7 500000 15 0.07 face value stated interest rate 1 (a) annual market rate 0.09 -D7/2 semi annual market rate 10 semi annual interest payment D2 D4/D5 PV of face value + PV of interest payments bond selling price --PV(D8,(SDS3 SD$5),0,5D$2,0) --PV(D8,SD$3 SD$5,D10,0,0) -D11+D12 12 13 14 15 16 17 18 19 20 21 1 (b) annual market rate 0.06 semi annual market rate D15/2 semi annual interest payment D2 D4/D5 PV of face value + PV of interest payments - bond selling price --PV (D16,(SDS3 SDS5),0,5D$2,0) --PV(D16,SD$3 SD$5,D18,0,0) -D19+D20 24 25 26 27 28 29 30 31 32 2 the bond in (a) is sold at a: IF(D13>D2,PREMIUM,DISCOUNT) the bond in (b) is sold at a IF(D21>D3,PREMIUM,DISCOUNT) 3 (a) Annual market rate 0.09 Bond selling price --PV(D8,5D$3 SD$5,D10,D2,0) (b) Annual market rate 0.06 Bond selling pricePVID16,SDS3 SDS5,D18 D2,0)

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