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Moss Co. issued $780,000 of five-year, 11% bonds, with interest payable semiannually, at a market (effective) interest rate of 10%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar.

Respuesta :

Answer:

$810,113.2678

Explanation:

The computation of the present value of the bond payable is shown below:

= Issued amount × discount factor of 5% at 10 years + Issued amount × half of the bond interest × PVIFA factor of 5% at 10 years

= $780,000 × 0.613913254  + $780,000 × 5.5% × 7.7217

= $478,852.3378  + $331,260.93

= $810,113.2678

Refer to the discount factor table and PVIFA factor table

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