A company issued 11%, 5-year bonds with a par value of $70,000. The market rate when the bonds were issued was 10%. The company received $72,702 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:

$3,500.00.

$3,850.00.

$7,700.00.

$3,635.10.

$7,270.20.