IFA12 – Bond Valuation Practice Problem – Time Value of Money

Download the Workbook: http://www.tonybell.com Unlock 100+ Members Accounting Tutorials: https://www.youtube.com/channel/UCNFClg6mzfZ5ixpuH9c7f1A/join In This Video: We wrap up the Time Value of Money module by working through Problem 3-8A, an essential application of present value concepts to bond pricing. This practice problem walks through calculating the initial price of a 10-year, $1,000,000 bond issued at a premium, featuring a 9% coupon rate and semi-annual payments against an 8% market yield. We also calculate the bond's carrying value at the 5-year and 9-year marks, and explain the theory behind why the carrying amount amortizes over the life of the bond. Module Overview (IFA6–IFA12): This module provides a comprehensive review of the Time Value of Money (TVM). We dive deep into calculations for Present Value (PV) and Future Value (FV) across a variety of scenarios. Mastering these mathematical concepts, particularly the PV of an annuity, is a critical foundational skill for intermediate accounting topics like valuing bonds, leases, and long-term assets.