On January 1, Year 1, Bottoms Up, Inc., issued $1,000,000 of 6%, 20-year bonds when the market rate of interest was 5%. The bonds pay interest annually on December 31. On its income statement for the year ended December 31, Year 1, Bottoms Up will show Interest Expense of ________.
a. more than $60,000
b. less than $60,000
c. exactly $60,000
d. The answer cannot be determined without knowing the price of the bond.
Ans: b. less than $60,000
Business
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