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What interest expense should the firm report for the bonds

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Question - A firm plans an issue of bonds with a maturity value of $1,000, a coupon rate of 8% per year, and a maturity of three years. At the time of issuance, the market interest rate for comparable bonds is 7%. Using the effective interest method, what interest expense should the firm report for the bonds for the first year (assuming the bonds are issued at the beginning of the year)?

a. $57.64

b. $70.00

c. $71.84

d. $68.16

Reference no: EM133046800

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