On January 1 of Year 1, Congo Express Airways Issued

Multiple Choice

On January 1 of Year 1, Congo Express Airways issued $3,500,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,197,389 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $10,087 every six months.
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The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be:

A) $224,826.
B) $245,000.
C) $132,500.
D) $225,000.
E) $265,174.