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A company issues 10,000,000 face value of 10-year bonds dated January 1, 2021 when the market interest rate on bonds of comparable risk and terms

A company issues 10,000,000 face value of 10-year bonds dated January 1, 2021 when the market interest rate on bonds of comparable risk and terms is 6%. The bonds pay 7% interest annually on December 31. Based on the effective interest rate method, the interest expense on December 31, 2021 is closest to:

a. 644,161

b. 700,000

c. 751,521

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