On January 1,Year 1,Strang Incorporated Issued Bonds with a Face

Multiple Choice

On January 1,Year 1,Strang Incorporated issued bonds with a face value of $500,000,a stated rate of interest of 8%,and a 5-year term to maturity.The effective rate of interest was 10%.Interest is payable in cash on June 30 and December 31 of each year.Which of the following statements is true?

A) This bond was issued at a premium,and each semiannual cash payment is $25,000.
B) This bond was issued at a discount,and each semiannual cash payment is $20,000.
C) This bond was issued at a discount,and the annual interest expense is $40,000.
D) This bond was issued at a premium,and the annual interest expense is $40,000.