Question

A company issued $100,000 5-year, 7% bonds and received $101,137 in cash. The market rate of interest when the bonds were issued was 6.5%. What is the amount of interest expense to be recorded for the first annual interest period if the company uses simplified effective-interest amortization?

A) $6,573.91

B) $7,000.00

C) $6,500.00

D) $7,079.59

Answer

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