Nash Co. issued bonds with a face value of \(\$ 120,000\) on January 1, 2011. The bonds had a 6 percent stated rate of interest and a five-year term. The bonds were issued at face value.

Required

a. What total amount of interest will Nash pay in 2011 if bond interest is paid annually each December 31 ?

b. What total amount of interest will Nash pay in 2011 if bond interest is paid semiannually each June 30 and December 31?

c. Write a memo explaining which option Nash would prefer.