On January 1, Year1, Boston Group issued $500,000 par value, 12% three-year bonds when the market rate of interest was 8%. Interest is payable semiannually on December 31. The following present value information is available:

	4%	8%
Present Value of $1 (n=5)	0.7903	0.6302
Present value of an ordinary annuity (n=5)	5.2421	4.6229
Present Value of $1 (n=3)	0.8890	0.7938
Present value of an ordinary annuity (n=5)	2.7751	2.5771

What amount is the value of net bonds payable at the end of year 1?