During November 2017, Southwest Airlines issued five-year notes with a face value of  $300 million. The stated interest rate on the notes was 2.8 percent, and proceeds from the issuance approximated $300 million.

a. Estimate the effective interest rate of the issuance.
b. Compute the interest expense associated with this note recorded in 2017.
c. Explain why the market paid $300 million for these notes.