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In this lesson, we explain what debentures are and how to calculate the market value (present value) of debentures (Bond yield / YTM) using the financial calculator HP 10bII Plus. We go through an example of how to discount the future values of a debenture in order to get the market value of the debenture.

Welcome to contacts in this lesson i’m going to be looking at how to calculate avenges the valuation of the vendors using the financial calculator the hp 10 b2 plus now i’ve done the same example before using the formula and we explained it in great detail so if you’d like to understand how it works with the debentures and how it’s calculated and why it’s calculated

To its alkylated you can click on the link in the description below and you should be fine with that otherwise here we’re just gonna quickly show you how to calculate it using the financial calculator so here we are told that at the benja has a face value of 10,000 ran a coupon rate of 11% payable annually a yield to maturity of 8% and matures in five years time

And the question is what is the value of the bond so here’s how you do this we know that it’s payable annually and the yield to maturity is 8% now we know that the coupon rate is their mother to be paid to the debenture order at specific intervals and this in this case it’s payable anyone okay so we know that this calculator here by default is compounded monthly

So we need to change that to annually and how do we know its monthly for you to check you just have to care a memory and how do you do that you press the orange button and then you press c and you can see it shows you the number of components player is 12 so we need to change it to 1 plus you can see it’s payable anyone and how do we do that just press 1 because

When i change it to 1 then you press the power inch button and then you press here it’s written pmt can see and is written piece /yr and now it’s change to 1 how do you know i just need to press the orange and the c and you can see now it’s one player now we can do our calculation we are told that it’s for five years so we just press the number of years which is

Five and then you press here is written n okay and then we press the yield to maturity and that’s the one who uses the interest rate okay so we’ll press 8 and then you press i /y r and then for the payment it’s the coupon rate of 11% okay so if you take it 11% times 10,000 ran it should give you 1,100 okay and that is going to be the payment that’s what you put

As the payment so you take the coupon rate multiplied by the face value of the debenture two out of 10,000 rem and you should be able to get the payment so 11% times 10,000 ren is 1,100 so i’m just gonna put 1,100 pmt the future value of the debenture is 10,000 grand so i’m just gonna press 10,000 and then i put that as the future value and all i need to complete

Is the present venue that’s the value of the board so i press pv and there we have it the present value of the bond is eleven thousand one hundred and ninety seven and eight to one cents okay if he has a negative because my future my future value and my payment was positive if i put both of them as negative then my present value is gonna appear as a positive but

It’s just a sign i hope it has made sense i hope you know how to calculate your debenture using the financial calculator the hp 10 b 2 class otherwise you can also check the lesson where we explained it in great detail till next time cheers

Transcribed from video

Debenture Valuation | HP 10bII+ Financial Calculator By Counttuts