Bond valuation example

To calculate the value of a bond on the issue date, you can use the PV function. In the example shown, the formula in C10 is: =-PV(C6/C8,C7*C8,C5/C8*C4,C4) Note: This example assumes that today is the issue date, so the next payment will occur in exactly six months. See note below on finding the value of a bond on any date.

April 14, 2025 · 1 min · 64 words · Christopher Mason

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The $1,000 will be returned at maturity.

Finally, the required rate of return (discount rate) is assumed to be 8%.

The value of an asset is the present value of its cash flows.

Excel formula: Present value of annuity

ThePRICE functioncan be used to calculate the “clean price” of a bond on any date.

More detail

For a more detailed explanation of bond valuation,see this articleontvmcalcs.com.

FV Function

PRICE Function

Excel formula: Future value of annuity

Excel formula: Future value vs. Present value

Excel PV function

Excel FV function

Excel PRICE function