Question

when valuing a callable bond, do i add the first year's payments to the value of the bond?

Answer 1

what kind of model are you using?

Answer 2

\[P=\sum_{t=1}^{n*}C/(1+r)^{t}+M*/(1+r)^n\]

Answer 3

here n* is number of years untill the assumed call date and M* is call price.
Hope this solves all your doubt.
and yes first year`s payment (coupon) will be count.