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Financial Calculator Bond

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Michele Said:

Where can I Buy a Financial Calculator for class?

We Answered:

Walmart sells them for about $20-$25. I bought one for my corporate finance class.

Target, Circuit CIty, Best Buy, and Fry's also sell them for around the same price.

Clifford Said:

Can I calculate YTM without Excel or Calculator?

We Answered:

Yes. Here are two ways.

1. You can take the present value of a) present value of the sum of the cash flows for each year, b) and then take the present value of the maturity amount in year twelve. Once you have the equaltion set up you would solve for interest rate. This would be a PAIN!!!! So the best way is to use number 2.

Here is a good example of 1. http://www.moneychimp.com/articles/finwo…

2. You would take the present value annuity equation and set the coupon payments as the payments, and fill the rest of the equation with what you have. Then to that equation you would add the present value of the face value of the bond. Again you would solve for the interest rate. You can use the present value annuity because your coupon payments are constant over the 12 years.

The 2 methods may give you slightly different results, but they are both correct ways.
Hope it was not too complicated.... i tried to explain the best I could :)

Lewis Said:

How do you get the PV of an ordinary annuity using a financial calculator?

We Answered:

The exact procedure depends on which financial calculator you have. I am willing to BET the calculator will TELL you if you can find a help button or one labeled PV (present value). I am 100% positive it you visit the manufacturer's website, you can download a complete manual.
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