Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

Financial Accounting

11. Long Term Liabilities

Introduction to Bonds and Bond Characteristics

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Multiple Choice

Which Excel formula can you use to determine the present value of a bond based on its future cash flows, coupon payments, and yield to maturity?

NPER

PMT

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Verified step by step guidance

Understand the concept of present value (PV): The present value is the current worth of future cash flows, discounted at a specific rate (yield to maturity). It accounts for the time value of money.

Identify the Excel formula for calculating present value: The formula is `PV(rate, nper, pmt, [fv], [type])`. Each parameter represents a specific financial variable.

Break down the parameters of the PV formula: 'rate' is the yield to maturity (discount rate), 'nper' is the total number of periods, 'pmt' is the periodic coupon payment, 'fv' is the future value of the bond (typically the face value), and 'type' indicates whether payments are made at the beginning or end of the period (optional).

Input the values into the formula: Replace 'rate' with the bond's yield to maturity, 'nper' with the number of periods until maturity, 'pmt' with the bond's coupon payment, and 'fv' with the bond's face value. Ensure the values are consistent in terms of time periods (e.g., annual or semi-annual).

Use the PV formula in Excel: Enter the formula into a cell, such as `=PV(rate, nper, pmt, fv)`, to calculate the present value of the bond based on its future cash flows, coupon payments, and yield to maturity.