On June 30, 2010, Kenneths Watch Co. issued $50,000 worth of 6% bonds at 110. These are

Question:

On June 30, 2010, Kenneth’s Watch Co. issued $50,000 worth of 6% bonds at 110. These are 10-year bonds with interest paid annually on June 30.
1. What are the interest payments for the first two years?
2. Was the market interest rate higher or lower than 6% at the date of issue?
3. Will the interest expense be higher or lower than the interest payment?