On January 1, Year 1, Denver Co. issued bonds with a face value of $100,000, a stated rate of interest of 8%, and a 5-year term to maturity. The bonds were sold at 102.5. Denver uses the straight-line method to amortize bond discounts and premiums. What is the amount of interest expense during Year 1?
A. $8,200
B. $8,000
C. $7,500
D. $8,500
Answer: C
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