Answer:
$23,021,112.50 approx
Explanation:
The computation of the present value of the bond payable is shown below:
= Book value × PVIF for 10 years at 5% + Interest payment × PVIF for 10 years at 5%
= $25,000,000 × 0.6439 + $875,000 × 7.9127
= $16,097,500 + $6,923,612.50
= $23,021,112.50 approx
Refer to the PVIF and PVIFA table
The interest payment would be
= $25,000,000 × 7% ÷ 2
= $875,000
In case of semi annual, the time period is doubles whereas the interest rate is half
