1. Valuing Bonds in Excel

Freedonia Township is planning to issue a 30-year bond with a face (par) value of $20,000,000

to construct a new sports and recreation center. The Township will make interest payments

twice each year. The stated interest rate (coupon rate) on the bond is 4.5 percent.

A. Calculate the amount of the semi-annual interest payments that will be made on the

bond. Explain your method and/or copy work in from Excel.

B. Calculate how much Freedonia Township will realize from the bond offering if interest

rates are 4 percent at the time of the offering.

C. Calculate how much Freedonia Township will realize from the bond offering if interest

rates are 4.75 percent at the time of the offering.

D. In a couple of sentences, explain why the amount the Freedonia will raise from the bond

offering varies depending on the interest rate effective at the time of the offering.