Bonds basics. Computing a present value using Google Sheets.

Assume you are to receive $1000 at the end of each year for the next 10 year

What is the value of the that investment assuming a discount rate of 5%?

The discount rate is sometimes referred to as the opportunity cost,cost of capital, or risk adjusted discount rate

The NPV computed should include the expense incurred to get this series of cash flow

Annuities and bonds paying annually follow this pattern : PV = C + C / (1+r) + C/(1+r)^2 + ... + C/(1+r)^n

Bonds differ slightly as you get the Face Value back at maturity:

PV = C + C/(1+r) + C/(1+r)^2 + ... + (FV+C)/(1+r)^n

Click here for series refresherThis can be summarized for annuities by PV = C ( (1-1/(1+r)^n)/r )