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Please answer in MS Excel with formulas 2. Bond Valuation (point 20%)...

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Please answer in MS Excel with formulas
2. Bond Valuation (point 20%) LO-3: Calculate Time Value of Money, Common Stock Valuation, Bond Valuation, The Cost of Capital, Capital Budgeting, Risk and Capital Budgeting After recently receiving a bonus, you have decided to add some bonds to your investment portfolio. You have narrowed your choice down to the following bonds (assume semiannual payments): Bond A Bond B Settlement Date 2/15/2012 2/15/2012 Maturity Date 4/15/2016 6/15/2027 Coupon Rate 3.50% 8.00% Price $ 890.00 $ 1,040.00 Face Value $ 1,000.00 $ 1,000.00 $ a. Using the PRICE function, calculate the intrinsic value of each bond. Is either bond currently undervalued? How much accrued interest would you have to pay for each bond? b. Using the YIELD function, calculate the yield to maturity of each bond using the current market prices. c. Calculate the duration and modified duration of each bond. d. Which bond would you rather own if you expect market rates to fall by 2% across the maturity spectrum? What if rates will rise by 2%? Why

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