A company issued 7%, five-year bonds with a par value of $125,000. The market ra

Question

A company issued 7%, five-year bonds with a par value of $125,000. The market rate when the bonds were issued was 7.5%. The company received $122,375 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:

A company issued 7%, five-year bonds with a par value of $125,000. The market rate when the bonds were issued was 7.5%. The company received $122,375 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:

Explanation / Answer

$4,283.12

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