Question: 11. Lesp Industries issues five-year bonds dated 1 January 2015 with a face value of $2,000,000 and 3% coupon rate paid annually on 31 December.

11. Lesp Industries issues five-year bonds dated 1 January 2015 with a face value of $2,000,000 and 3% coupon rate paid annually on 31 December. The market interest rate on bonds of comparable risk and term is 4%. The sales proceeds of the bonds are $1,910,964. Under the effective interest rate method, the interest expense in 2017 is closest to:

A. $77,096.

B. $77,780.

C. $77,807.

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