Question: 1. Auerbach Inc. issued 4% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of

1. Auerbach Inc. issued 4% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 6%. Assuming that Auerbach issued the bonds for $255,369,000, what interest expense would it recognize in its 2016 income statement? $0. $3,830,535. $5,107,380. $7,661,070.

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