Auerbach Inc. issued 10% bonds on October 1, 2018. The bonds have a maturity date of September 30, 2028 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2019. The effective interest rate established by the market was 12%. Assuming that Auerbach issued the bonds for $265,588,800, what interest expense would it recognize in its 2018 income statement? (Do not round intermediate calculations and round final answer to nearest whole dollar.)

Multiple Choice

• $0.

• $7,967,664.

• $15,935,328.

• $9,000,000.