What is the interest expense on the bonds in 2010?
A)$700,700.
B)$600,000.
C)$351,337.
D)$100,700.Semiannual effective rate = $345,639 / $8,640,967 = 4% Interest expense = $349,363 + ($8,783,433 4%) = $700,700

Question

Quizplus · Accepted Answer

We can calculate the interest expense by adding the semiannual coupon payment of $349,363 to the semiannual amortization of the discount of $8,783,433 at a 4% semiannual effective rate. This gives us an annual interest expense of $700,700. Therefore, option A is the correct answer.

What Is the Interest Expense on the Bonds in 2010