The Ness Company sells $5,000,000 of five-year, 10% bonds at the start of the year. The bonds have an effective yield of 9%. Present value factors are below:

	10%	9%
PV $1 factor 1 year	0.90909	0.91743
PV $1 factor 2 years	0.82645	0.84168
PV $1 factor 3 years	0.75131	0.77218
PV $1 factor 4 years	0.68301	0.70843
PV $1 factor 5 years	0.62092	0.64993

The bond interest expense for Year 1 is:

• $467,503.

• $538,895.

• $500,000.

• $532,497.