JavaScript Bond Calculator
The purpose of this calculator is to provide calculations and details for bond valuation problems.
It is assumed that all bonds pay interest semi-annually.
Future versions of this calculator will allow for different interest frequency.
Instructions: Fill in the spaces that correspond to the number of years, maturity, coupon rate, and yield-to-maturity,
followed by clicking on the "Compute" button.
The calculator will provide the rest.
The coupon rate and yield-to-maturity can be entered as whole numbers or in decimals.
Further business analysis samples of
Interest Rates and Bond Prices
Future Value of Annuity
FV = C + C( 1 + r ) + C ( 1 + r )
2 + ... + C( 1 + r )
n - 1 = C [((1+r)
n-1)/r]
where
C is the cashflow
and
n is the number of cashflows.
Net Present Value of Annuity
NPV = C / (1 + r) + C / (1 + r)
2 + ... + C / (1 + r)
n = C { 1 - [1/(1+r)
n] / r }
where
C is the cashflow
and
n is the number of cashflows.
Continuous Compounding
From compounding
m times per year to continuous compounding:
r
c =
m * ln( 1 + r
m / m )
From continuous compounding to compounding
m times per year:
r
m = m( e
rc / m - 1 )
Example
Interest Rate | 8% per annuum |
Compounding | Quarterly(4) |
r
c = 4 * ln ( 1 + 0.08 / 4 ) = 0.0792 = 7.92%
Next, consider an interest rate that is quoted 12% per annum with continuous compounding.
The equivalent rate with annual compounding is
r
1 = 1 (e
0.12/1 - 1 ) 0.1275 = 12.75%
Compounding Frequency
From compounding
m times per year to annual compounding:
r = (1 + r
m / m)
m - 1
From annual compounding to compounding
m times per annum:
r
m = m * [ (1 + r)
(1/m) - 1 ]
Example
Interest Rate | 8% per annuum |
Compounding | Quarterly(4) |
The equivalent rate with annual compounding is
r = ( 1 + 0.08 / 4 )
4 - 1 = 0.0824 = 8.24%
From
m to
n compoundings per annum:
The formula below can ber used to transform a rate r
n with
n compoundings per year
to a rate r
m with
m compoundings per year
r
n = n * [ ( 1 + r
m / m )
m/n - 1 ]
Example
Consider a rate with compounding frequency four times per year.
If the rate is 7% then the equivalent rate with
semiannual compounding:
r
2 = 2 * [ ( 1 + 0.07 / 4 )
4/2 - 1 ] = 0.0706
The equivalent rate with
semiannual compounding is 7.06%