Computing Bond Issue Price and Preparing an Amortization Table in Excel

On January 1, 2017, Springfield Inc. issues $400,000 of 8% bonds that pay interest semiannually and mature in 10 years (December 31, 2026).

a. Using the Excel PRICE function, compute the issue price assuming that the bonds market rate is 7% per year compounded semiannually. (Use 100 for the redemption value to get a price as a percentage of the face amount, and use 1 for the basis.)

b. Prepare an amortization table in Excel to demonstrate the amortization of the book (carrying) value to the $400,000 maturity value at the end of the 20th semiannual period.