AMORLINC Formula
The AMORLINC formula is a function used in financial calculations to determine the amortization of a bond premium or discount over a specific period. It stands for "Amortization of Linearly Increasing Premium/Discount." This formula is commonly used in accounting and finance to allocate the premium or discount over the bond's life.
AMORLINC Formula:
AMORLINC (settlement, maturity, issue, rate, basis, dates)
Explanation:
- Settlement: The date on which the bond is purchased.
- Maturity: The date on which the bond will reach its maturity.
- Issue: The date on which the bond was issued.
- Rate: The annual interest rate of the bond.
- Basis: The day count basis to be used in the calculation.
- Dates: An optional argument that specifies the schedule of payment dates.
Example (Tabular Format):
Let's consider a bond with the following details:
- Settlement date: January 1, 2023
- Maturity date: December 31, 2025
- Issue date: January 1, 2022
- Annual interest rate: 5%
- Day count basis: Actual/365
In this example, we want to calculate the amortization of a bond premium or discount on a yearly basis. The table below illustrates the amortization schedule for each year:
