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A bond value calculator capable of accurately determining the current value of a bond, can be easily assembled in a Microsoft Excel spread sheet. Once created, the desired data will automatically appear in the designated cells when the required input values are entered. This article provides step-by-step instructions on how to create a bond value calculator in an Excel spreadsheet.
Steps
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Type the column heading and data labels. Beginning with cell A1, type the following text into cells A1 through A8: Bond Yield Data, Face Value, Annual Coupon Rate, Annual Required Return, Years to Maturity, Years to Call, Call Premium and Payment Frequency. Skipping over cell A9, type "Value of Bond" in cell A10.
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Format the text in column A. Move the mouse pointer over the line separating columns A and B, just above the Bond Yield Data column heading. Click and drag the line to widen column A enough to fit the text in the column.Advertisement
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Format the column headings. Click and drag to select cells A2 and B2. Hold down the control key on your keyboard. Confirm that both cells are selected, click the "Merge cells" button, and then click the "Center Text" button. With cells A2 and B2 still selected, click the "Borders" button and select "All borders."
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Set the numerical formatting in column B. Hold down the control key on your keyboard and select cells B2 and B10. With both cells selected, click the "Currency" button ($) on the "Quick format" tool bar. The formatted cell values will display as a dollar amount.
- Hold down the control key and select cells A3, A4 and A7. With all 3 cells selected, click the "Percent" button (%) on the "Quick format" tool bar. The formatted cell values will display as a percentage.
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Expert Q&A
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QuestionCan you explain what a bond is?Paridhi Jain is a Certified Public Accountant and the Co-Founder of Seva Ltd, a CPA firm operating in Maryland and Alabama. She has over 10 years of professional experience in the financial sector and has built a reputation for assisting small business owners navigate the intricacies of regulatory compliance, encompassing areas from company structuring and entity formation to detailed nexus determinations for income and sales tax. She is an active member of the Alabama Society of CPAs and has a certification in pre-professional accounting. She graduated Magna Cum Laude from the University of Maryland, Baltimore County with a major in Information Systems.A bond is essentially a financial instrument representing borrowed money, either lent to a company or the government. In this scenario, imagine an agreement between an investor (let's say, you) and a company (e.g., Google). You give them $100, and they commit to returning $110 after 10 years. However, if you decide to sell the bond before its maturity, the accrued interest comes into play. For instance, if you sell it after five years, you might sell it for $105, reflecting the time value of the money spent. The accrued interest in this case would be $5, representing the earnings that could have been made during the time the bond was held. The actual transaction price may vary due to market dynamics, but the accrued interest is a measure of the time-related value of the investment.
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QuestionHow do you determine if replacing one bond with another bond almost the same is a good swap?Zoya AliCommunity AnswerSwapping one bond for another that is almost the same requires considering several factors to determine if it's a good swap. Here are some considerations: Compare the yield and coupon rate of the existing bond with the one you're considering. If the new bond offers a higher yield or coupon rate, it might be a favorable swap. Assess the credit quality of both bonds. If the new bond has a better credit rating, it could be a positive swap, as it implies lower default risk.
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Expert Interview
Thanks for reading our article! If you’d like to learn more about microsoft excel, check out our in-depth interview with Paridhi Jain .
References
- Go with Microsoft, Excel 2007-Comprehensive First Edition, Shelly Gaskin and Karen Jolly. Published in 2008, Pearson Education Inc., Upper Saddle River, NJ.
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