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4. Ansbach Inc. issued 4% bonds on October 1, 2016. The bonds have a maturity date of

September 30, 2026 and a face value of $300 million. The bonds pay interest each March 31 and

September 30, beginning March 31, 2017. The effective interest rate established by the market

was 6%.

Assuming that Ansbach issued the bonds for $255,369,000, what interest expense would it

recognize in its 2016 income statement?

a.

$0

b.

$3,830,535

c.

$5,107,380

d.

$7,661,070