1. Barney Inc. has bonds outstanding that were issued at a premium. The bonds were issued on January 1 and pay interest on June 30 and December 31. At the beginning of the current year the bonds had a carrying value of $ 105000. The bonds have a face value of $ 91000. The bonds pay interest at an annual interest rate of 8 %. The annual market rate on the bonds at the time they were issued was 2 %. The current annual market rate on bonds is 7 %. Round any value to two decimal places in intermediate steps and round your final answer to the nearest dollar.

Calculate interest expense for the year on the bonds. Round your answer to the nearest dollar. (Please note that you do not require present value tables to answer this question so their omission is deliberate.)

Answer (2074)