At the start of the year, Axon, Inc. issued bonds for $38,800. The bonds had a face value of $40,000. If the coupon (stated) rate of interest was 4% and the effective (market) rate of interest was 5%, how would Axon calculate the interest expense for the first year using the effective interest method?

	a.	$38,800 x 4%
	b.	40,000-38,800
	c.	$40,000 x 5%
	d.	$40,000 x 4%
	e.	$38,800 x 5%