On January 1, a company issued 6%, 10year bonds with a face amount of $94 million for $81,225,391 to yield 8%. Interest is paid semiannually.

On January 1, a company issued 6%, 10year

bonds with a face amount of $94 million for $81,225,391 to

yield 8%. Interest is paid semiannually.

What was interest expense at the effective interest rate on June 30, the first interest date? (Enter your

answers in dollars not in millions. Round "PV Factor" to 5 decimal places and final answer to the

nearest dollar amount. Omit the "$" sign in your response.)

Interest expense $ 3,249,016 ± .01%

Explanation:

Interest will be the effective rate times the outstanding balance:

4.0% × $81,225,391 = $3,249,016