The below information will be used for the next two questions A Company issued a bond payable with detachable warrants on January 1, 20X1 as follows All bonds are interest due annually with the bond due at maturity Bond payable ($1,000 par value 400 bonds) $400,000 Coupon rate 4 70 Bond issue price $414,000 Fair value of the bonds after issuance $390,000 Term 10 years Number of detachable warrants per bond 50 Fair value of the warrants after issuance $2 00 Stock purchase price $15 00 Warrants exercised 5,000 1 warrant 1 share of $1 par value stock What is interest expense in 20X1 THE ANSWER IS NOT 18,800 or 188,000

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Question: The below information will be used for the next two questions. A Company issued a bond payable with detachable warrants on January 1, 20X1 as

The below information will be used for the next two questions.

A Company issued a bond payable with detachable warrants on January 1, 20X1 as follows. All bonds are interest due annually with the bond due at maturity.

Bond payable ($1,000 par value; 400 bonds)	$400,000
Coupon rate	4.70%
Bond issue price	$414,000
Fair value of the bonds after issuance	$390,000
Term	10 years
Number of detachable warrants per bond	50
Fair value of the warrants after issuance	$2.00
Stock purchase price	$15.00
Warrants exercised	5,000

1 warrant = 1 share of $1 par value stock

What is interest expense in 20X1?

THE ANSWER IS NOT 18,800 or 188,000!!!

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