Auerbach Inc. issued 6% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $425 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 8%.

Assuming that Auerbach issued the bonds for $367,242,458, what interest expense would it recognize in its 2016 income statement

$0.

$7,344,849.

$8,500,000.

$14,689,698.