Auerbach Inc

Auerbach Inc. issued 4% bonds on October 1, 2018. The bonds have a maturity date of September 30, 2028 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2019. The effective interest rate established by the market was 6%.
-Assuming that Auerbach issued the bonds for $255,369,000, what interest expense would it recognize in its 2018 income statement?

A) $0.
B) $3,830,535.
C) $5,107,380.
D) $7,661,070.

Correct Answer:

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