Pinder Co. produces and sells high-quality video equipment. To finance its operations, Pinder issued $25,000,000 of five-year, 7% bonds, with interest payable semiannually, at a market (effective) interest rate of 9%. Determine the present value of the bonds payable, using the present value tables in Exhibit 5 and Exhibit 7. Round to the nearest dollar.

$23,021,880

Explanation:

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

= Present value of interest × PVIFA factor for 4.5% at 10 years + Present value of principal × discount rate for 4.5% for 10 years

= $25,000,000 × 3.5% × 7.91272 + $25,000,000 × 0.64393

= $6,923,630 + $16,098,250

= $23,021,880

Refer to the discount table and the PVIFA factor table

We simply added the interest amount and the principal amount by considering the discount rate and the PVIFA factor

answer; i believe the correct answer is (4.0);

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