Present Value of Bonds Payable; Premium

Mason Co. issued $550,000 of five-year, 13% bonds with interest payable semiannually, at a market (effective) interest rate of 12%.

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

EXHIBIT 4 Present Value of $1 at Compound Interest ANI-No 10% 0.90909 0.82645 13% 11% 0.90090 0.81162 Periods 4% 0.96154 0.956940 0.92456 0.915730 5% 0.95238 0.90703 51/2% 0.94787 0.89845 6% 0.94340 0.89000 7% 0.93458 0.87344 12% 0.89286 0.79719 0.88496 0.78315 0.88900 0.876300 0.86384 0.85161 0.83962 0.81630 0.75 131 0.73119 0.71178 0.69305 0.61332 0.54276 0.79031 0.767900 0.74622 0.72525 0.70496 0.66634 0.56447 0.53464 0.50663 0.48032 0.42506 0.37616 0.33288 0.29459 0.80722 0.76513 0.76290 0.71299 0.68301 0.62092 4 0.85480 0.838560 0.82193 0.802450 0.79209 0.74726 0.65873 0.59345 0.63552 0.56743 0.82270 0.78353 6 0.75992 0.734830 0.73069 0.703190 0.70259 0.672900 0.67556 0.643930 0.71068 0.67684 0.64461 0.61391 0.68744 0.65160 0.61763 0.58543 0.66506 0.62741 0.59190 0.55839 0.62275 0.58201 0.54393 0.50835 0.51316 0.46651 0.42410 0.38554 0.48166 0.43393 0.39092 0.35218 0.45235 0.40388 0.36061 0.32197 8