Use the Present Value and Future Value Tables Included in Appendix

Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-On January 1, 2012, Cabuki Corporation issued $500,000 of 10 percent, 10-year bonds at 88.5. Interest is payable on December 31. If the market rate of interest was 12 percent at the time the bonds were issued, how much was interest expense in 2012 (assuming Cabuki uses the effective-interest amortization method) ?

A) $44,250
B) $50,000
C) $53,100
D) $60,000

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