On January 1, Your Company Issues a 5-Year Bond with a Face

Multiple Choice

On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond was $10,866. Using the effective-interest
Method of amortization and rounding to the nearest dollar, the interest expense for the first year ended
December 31 would be:

A) $700.
B) $543
C) $667.
D) $759