A Company Issues 8% Bonds with a Par Value of $40,000

Multiple Choice

A company issues 8% bonds with a par value of $40,000 at par on January 1. The market rate on the date of issuance was 7%. The bonds pay interest semiannually on January 1 and July 1. The cash paid on July 1 to the bond holder(s) is:

A) $3,200.
B) $1,400.
C) $0.
D) $1,600.
E) $2,800.