A Company Issued 5-Year, 7% Bonds with a Par Value

Multiple Choice

A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $102,105 cash for the bonds.
-Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is:

A) $7,000.00.
B) $1,750.00.
C) $3,318.41.
D) $6,573.90.
E) $3,500.00.