Ross et al.: Fundamentals
of Corporate Finance, Sixth
Edition, Alternate EditionIII. Valuation of Future
Cash Flows- Interest Rates and Bond
Valuation
(^272) © The McGraw−Hill
Companies, 2002
“FRED” data, then “Interest Rates.” You will find listings for Moody’s Seasoned
Aaa Corporate Bond Yield and Moody’s Seasoned Baa Corporate Bond Yield. A
default premium can be calculated as the difference between the Aaa bond yield
and the Baa bond yield. Calculate the default premium using these two bond in-
dices for the most recent 36 months. Is the default premium the same for every
month? Why do you think this is?
Spreadsheet Templates7–5, 7–6, 7–7, 7–18, 7–27
242 PART THREE Valuation of Future Cash Flows
A B C D
E F G H
321
654
987
112110
1143
Using a spreadsheet for time value of
If we inves $t 25 , (^000) at 12 percent, how lo mongn uey cnalculations
RaFteuPrtefu (rarsoeer n Vthet)talue Va uluen (fvek (pn)ovw)n of periods, so we use^ the formail tl NPweE hRa (ravet $e,^50 p,m^0 t,^0 p^0? Wvfve) need to solve
ThPe erforiods:
mal entered in cell B 10 is = NPER: notic
has a (^) negative sign on it. Also notice that rate is ee tnteharet pdm ats is de zceimro aal, nndot th aat pv
percentage.
$ 5 $ 002 ,0.^5 ,^00000
6 .1 1625512