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Dot Company issued $200,000 of bonds on January 1, 2018 with interest payable each year. The bonds had a stated rate of 8%. The bonds
Dot Company issued $200,000 of bonds on January 1, 2018 with interest payable each year. The bonds had a stated rate of 8%. The bonds were set up as floating-rate debt with the rated pegged to LIBOR plus 3%.
Which of the following will be the interest expense for year 1 if LIBOR is 7%?
Multiple Choice
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$20,000
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$16,000
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$6,000
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$14,000
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