Present Value ofBondsPayable;Discount

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 inExhibit 5andExhibit 7. Round to the nearest dollar.

Remember, the selling price of a bond is the sum of the present values of: the face amount of the bonds due at the maturity date and the periodic interest to be paid on the bonds.

The market rate of interest is used to compute the present value of both the face amount and the periodic interest.