# Excel Formulas To Calculate The Bond Valuation

Assume that you’ve been assigned a task of calculating bond valuation; so if you are new to Ms Excel or do not have much experience with it, then I am pretty sure about it that doing this task manually might be your first approach, which is fine, but what will you do if you were assigned to compute bond valuation again and again with various values? If you still prefer to do it manually, then let me add that it will waste a lot of your time, and there is a probability that you will not be able to finish your task on time. But don’t worry since you’ve just landed on the right article where you’ll learn an efficient approach to calculate bond valuation in a matter of seconds.

So, without further ado, let’s dive into it.

## General Formula:

In Excel, use the formulae to compute the value of a bond on the issuance date.

`=-PV(B3/B6,B5*B6,B4/B6*B2,B2)`

Explanations of Syntax:

In order to use this formula to complete your task, you must be knowledgeable of the syntax used in that formula.

• `PV`: The PV function in Excel is a financial tool that calculates the present value of an investment.
• `Division (/)`: This symbol divides values or integers.
• `The plus operator (+)`: This operator is used to add the values.
• `Minus Operator (-)`: Use this symbol to subtract any two numbers.
• `Multiplication (*)`: In this symbol, any two values or numbers will be multiplied.
• `The comma symbol (,)`: This symbol is a separator that aids in the separation of a list of values.
• `Parenthesis ()`: This symbol’s primary function is to group the elements.

## Summary

The PV function may determine the value of a bond on the issuance date. In this post, we will look at two examples to better grasp the formula in F2. In the first case, the formula in F2 is as follows:

`=-PV(B3/B6,B5*B6,B4/B6*B2,B2)` This example assumes that the issue date is today and that the next payment will be made in precisely 8 months. See the note below for information on calculating the value of a bond on any date.

## Explanation

In the first example, we have a four-year bond with a \$5,000 face value. Because the coupon rate is 8%, the bond will pay 8% of its face value in interest each year, or \$400. However, because interest is paid in two equal installments semiannually, there will be eight \$200 coupon payments. At maturity, the \$5,000 will be repaid. Finally, the needed rate of return (discount rate) is set at 10%.

The present value of an asset’s cash flows is its worth. In this example, the PV function calculates the present value of the eight equal installments plus the \$5000 payback when the bond matures. The PV function is set up as follows:

`=-PV(B3/B6,B5*B6,B4/B6*B2,B2)`

PV was given the following arguments:

• rate – B3/B6 =10%/2=5%
• nper – B5*B6=4*2=8
• pmt – B4/B6*B2=8%/2*5000=200
• fv – 5000

The PV function yields `- 4676.84`; thus, we apply a negative sign before the PV function to achieve the final result of` \$ 4676.84`.

If you’re still confused, don’t worry because this second example will clear everything out for you.

In Example 2nd, we will see how to calculate bond valuation in Excel using the procedures below.

• This section will enter the input values in Columns A and B.
• Next, we will compute the value of a bond on the issuance date. Ranges of Input

• In any cell, type the formula mentioned above. Enter the formula here.

• Finally, you will obtain the result displayed below when you press the ENTER key. Between the payout dates of coupons

In the above example, using the PV function to calculate the value of a bond on a coupon payment date is pretty simple. Because interest does not compound between payments, determining the value of a bond between coupon payment dates is more complicated. The PRICE function may compute a bond’s “clean price” on any date.

## Conclusion:

In this lesson, we explained the formulae for calculating the valuation of a bond on the issuance date in Excel using two practical examples.

### Related Functions

• Excel PV function
The Excel PV function returns the present value of a loan or investment based on constant payments and a constant interest rate.The syntax of the PV function is as below:= PV(rate,nper,pmt,[fv],[type])

Related Posts

Calculate Cumulative Totals with Excel SUM Function

Today, through a simple example, we will show you how to use one of the most common-used Mathematical functions in excel, the SUM function, to add up the sum. In our daily life, we keep an account of what we ...

BMI Calculation Formula In Ms Excel

You might have come across a task in which you were assigned to make BMI calculations of the supplied numbers, and you may be looking for an efficient approach to accomplish this process rather than doing BMI calculations manually, by ...

Calculate The Period of Loan or Investment in Excel

In our daily life, most of us will invest or take a loan, so we need to master some simple financial functions to calculate the period needed for loans or investments. If you work as an accountant, you need to ...

Working Time Calculation Based on Timesheets

In the office, a special machine record the time when you start working (clock in office) and when you finish working (clock out of office). We can calculate the total working time by subtracting the end working time from the ...

Sort/Rank Numeric Values with Duplicate Values Exist

Excel built-in RANK function can sort a set of values. If there are duplicate numbers, then the rank number is also duplicated. See the following example: There are two numbers “100” in range A2:A9, they are both the third largest ...

Calculate Days Open in Excel

If you want to know how to Calculate days in Excel, there are some formulas that you can use to do so. For example, you can use the DAYS function in Excel to find the number of days between two ...

Calculate Grades With VLookup in Excel

Why Should You Calculate Grades With VLookup Excel? If you're looking for a simple way to find out a student's grades, VLOOKUP Excel can do the trick. This function uses a lookup table to find the values and sort them ...

Repeating Character n Times in Excel

In daily life, we can use repeated characters to indicate the magnitude or priority of something. For example, a single “!” indicates a minor case, double “!!” indicates a medium case, and triple “!!!” indicates a high case, and so ...

Calculate Cumulative Loan Interest in Excel

What is Cumulative Loan Interest? When comparing different types of loans, many people want to know what is Cumulative Loan Interest. The sum of all interest payments you've made on a loan is referred to as cumulative interest. Different lenders ...

Calculate Cumulative Loan Principal Payments in Excel

How do you Calculate Cumulative Loan Principal Payments in Excel? There are a few different ways to calculate this information, but one way has been proven to be accurate more often than others. One option is to use the CUMPRINC ...

Sidebar