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Determine the issuance price using the PV function in Excel




I need these questions answered in Excel..I have attached the Excel file as well as the Word document of these questions.;Question 1. On January 1, 2014 Peaches Corp. issued $100,000,000 of 9.3% bonds. Interest is paid semiannually on July 1st and January 1st. The bonds mature in 20 years. The market yield for bonds of similar risk and maturity is 8.4%.;a) Determine the issuance price using the PV function in Excel.;b) Create an amortization table for this bond.;c) To show that a firm can raise the same amount of funds regardless of the stated rate of interest do the following;? Redo part A but with a stated rate of interest of 2.3% instead of 9.3%- you will notice that the issuance price has gone down significantly;? Let?s assume that we want to raise the same amount at issuance as in part A. Use the FV function in Excel to determine the Maturity Value that would raise the same funds with the new stated interest of 2.3%. (Hint- the payment is going to be $3,018,878);Question 2. On January 1, 2014 Frock borrows $230,000 from the bank at 9.8% using an installment note. Frock will pay installment payments monthly for 3 years to repay the loan. The first payment takes place on February 1, 2014.;a) Determine the amount of the monthly payment required to pay off the loan in 3 years using the PMT function in Excel.;b) Create an amortization table for the installment note.;c) If Frock wanted to pay off the loan in 33 payments (instead of 36) with the same payment amount, then what interest rate would Frock need to qualify for? Use the RATE function in Excel to determine the annual interest rate required.;Question 3. Shank Corporation has a class-action lawsuit pending against the firm. Ignore the time value of money in this problem. The attorneys representing Shank predict that it will need to pay out one of the following amounts at the corresponding probabilities;Amount Probability;$10,000 2%;$100,000 20%;$500,000 15%;$2,000,000 20%;$5,000,000 40%;$10,000,000 3%;In accounting we are often asked to estimate things. There are many different estimation techniques available to us. Let?s investigate some of the most common;a) Ignoring the probabilities, estimate the amount we are going to pay out using the AVERAGE and MEDIAN functions in Excel. In many cases this is an acceptable estimation technique, but since we have probabilities we probably shouldn?t ignore them.;b) Calculate the probability weighted mean. Excel does not have a function to calculate probability weighted averages, but we can use a simple function to help us determine this value. Use the SUMPRODUCT function in Excel to determine the probability weighted mean. Now calculate the probability weighted average by multiplying each line and then adding the products.;c) Some estimations have more uncertainty than others. We have a number of techniques that help us get an idea of how sure we are that our estimation is a good one (with less potential variation in outcome). Ignoring our probabilities, calculate the standard deviation, maximum, and minimum using the STDEVA, MAX, and MIN functions. Calculate the range by taking the difference between the maximum and the minimum. Each of these values gives you an idea of how good your estimate may be. The larger the range and the standard deviation the less certainty you have that the outcome will be close to your estimation.


Paper#20831 | Written in 18-Jul-2015

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