This is a tool that calculates the purchase price (the present value) of a bond.

Note: The tool is designed for use with bonds that have a fixed coupon rate.

For this calculation, it is necessary to supply the following information:

• The par value of the bond, which is the future value of the bond at maturity.
• The annual coupon rate, which determines the total payment received per year while holding the bond, as a percentage of the bond par value, though the actual payments are made at the coupon frequency. This rate is usually expressed in percentage terms (unless the formatting is explicitly set to express it as a decimal).
• The coupon frequency, which specifies how often coupon payments are paid per year. The possible values for the coupon frequency are annual (default), semiannual, quarterly, monthly, weekly or daily.
• The maturity term in years.
• The annual interest rate, or required yield for the bond, which can be entered as either a nominal (default) or effective rate. If it is a nominal annual rate then it is used together with the coupon frequency to determine the interest rate applied per coupon payment period, since the compounding frequency is assumed to be the same as the payment frequency for this tool. An effective annual rate, on the other hand, is a rate that has already factored in the periodic compounding to give a rate equivalent to interest being compounded annually, and thus only needs payment frequency to determine the interest rate applied per payment period. On the tool form, the rate is usually expressed in percentage terms (unless the formatting is explicitly set to express it as a decimal).

Associated tool link: http://www.coggit.com/tools/bond_pricing.html