Mason Co. issued $720,000 of five-year, 13% bonds with interest payable semiannually, at a market (effective)...

Question

Question

Mason Co. issued $720,000 of five-year, 13% bonds with interest payable semiannually, at a market (effective) interest rate of 11%.

Determine the present value of the bonds payable, using the present value tables in Exhibit 4 and Exhibit 5. Round to the nearest dollar.
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Answer 1

Answer #1

FV= $720,000

Present Value of the bonds payable:

$720,000(PV, 5.5%, 10) + 6.5%($15,000,000)(PVA, 5.5%, 10)

= $720,000(0.58543)+6.5%($720,000)(7.53763)

= $421,509.60 +352,761.08

=$774,270.68 or $774,271

Present Value of Bond Payable = $774,271

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Answer 2

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