On June 30, 2010, McCorvey’s Lawn Service issued $7,500 worth of 6% bonds at approximately 102. These are five-year bonds with interest paid semiannually on December 31 and June 30.
1. What are the interest payments for the first two years?
2. Was the market interest rate higher or lower than 6% at the date of issue?
3. Will the interest expense be higher or lower than the interest payment?