Hocker Company issues $200,000 of ten-year, 8% bonds to yield 10% on January 1, 20X1. The bonds pay interest annually on December 31. The bonds were sold at a discount of $24,578. The amount of bond interest expense for 20X2 is:

• $16,000.

• $17,696.

• $18,458.

• $19,280.

The Ness Company sells $5,000,000 of five-year, 10% bonds at the start of the year. The bonds have an effective yield of 9%. Present value factors are below:

	10%	9%
PV $1 factor 1 year	0.90909	0.91743
PV $1 factor 2 years	0.82645	0.84168
PV $1 factor 3 years	0.75131	0.77218
PV $1 factor 4 years	0.68301	0.70843
PV $1 factor 5 years	0.62092	0.64993

The bonds will sell for:

• $4,805,525.

• $5,000,000.

• $5,050,000.

• $5,194,475.