Bond Discount with Straight-Line Amortization, part 7, calculating the Present Value of a 9 Bond in an 8 Market.
Put the bond information cells you've just created off to the side, away check voucher buku from the table columns.At the time of issue however, the market interest rate rose to 10 and the bond could fetch a price of 92,420 only.As you might guess, one of the domains in which Microsoft Excel really excels is finance math.Premium bonds have positive values for Amortized Amount.Note that under the effective interest rate method the interest expense for each year is increasing as the book value of the bond increases.The effective interest rate is multiplied times the bond's book value at the start of the accounting period to arrive at each period's interest expense.First Row, the first row contains only a value for the bonds Carrying Amount.If you get a different number, check your Yield to Maturity and ensure that it is correct to four decimal places.Payments Column, set the spreadsheet to display payment numbers beginning in Row.Calculate interest expense for the period.Bond Information, create cells to hold bond information, including Bond Purchase Price, Bond Face Value, Years Until Maturity, Coupon Rate and Yield to Maturity.The corporation must make an interest payment of 4,500 (100,000 x 9 x 6/12) on each June 30 and December 31 that the bonds are outstanding.The Row 2 Interest Expense equals 1/2 of the.8891 percent Yield to Maturity times the 970 Carrying Amount from the previous row.Copy this value from the Bond Purchase Price cell.The interest expense in column C is the product of the 5 market interest rate per semiannual period times the book value of the bond at the start of the semiannual period.8,000 this would lead to a higher figure for bond discount amortized during the period.
In case of amortization of premium, find the interest expense for the period by subtracting the amortization from the interest payment for the period.; Find the closing carrying amount of the bond payable (in the same way as in effective rate of amortization method).
Row 1 of Carrying Amount was pre-loaded from the Purchase Price cell.