User Manual

86 APPENDIX - Reference Information
where:
Net present value depends on the values of the initial cash flow (
CF
0
),
subsequent cash flows (
CF
j
), frequency of each cash flow (n
j
), and the
specified interest rate (
i).
IRR = 100  i, where i satisfies npv() = 0
Internal rate of return depends on the values of the initial cash flow
(
CF
0
) and the subsequent cash flows (CF
j
).
i = I/Y  100
Bonds
1
Price (given yield) with one coupon period or less to redemption:
where:
PRI =dollar price per $100 par value
RV =redemption value of the security per $100 par value (RV =
100 except in those cases where call or put features must be
considered)
R =annual interest rate (as a decimal; CPN _ 100)
M =number of coupon periods per year standard for the
particular security involved (set to 1 or 2 in Bond worksheet)
DSR =number of days from settlement date to redemption date
(maturity date, call date, put date, etc.)
1.Source for bond formulas (except duration): Lynch, John J.,
Jr., and Jan H. Mayle. Standard Securities Calculation Meth-
ods. New York: Securities Industry Association, 1986.
S
j
n
i
i 1=
j

j 1
0 j 0=





=
PRI
RV
100 R
M
------------------
+
1
DSR
E
-----------
Y
M
----





+
--------------------------------------
A
E
---
100 R
M
------------------
–=