Baliga Co. produces and sells high-quality audio equipment. To finance its operations, Baliga Co. issued $18,000,000 of five-year, 8% bonds with interest payable semiannually at a market (effective) interest rate of 10%. Determine the present value of the bonds at a market (effective) interest rate of 10%. Determine the present value of the bonds payable, using the present value tables in Exhibits 4 and 5. Round to the nearest dollar.

Present value of $1 for 10 (semiannual)

periods at 5% (semiannual rate)....................................... 0.61391

Face amount of bonds........................................................... × $18,000,000 $11,050,380

Present value of an annuity of $1

for 10 periods at 5%........................................................ 7.72174

Semiannual interest payment................................................. × $720,000 5,559,653

Total present value (proceeds)............................................... $16,610,033