A company issued 5-year, 10.50% bonds with a par value of $125,000. The market rate when the bonds were issued was 10.00%. The company received $127,630 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is:

Multiple Choice

$6,381.50.

$6,562.50.

$13,125.00.

$12,700.08.

$3,281.25.