Ohlson Co. is preparing an Excel spreadsheet for its 20-year, 4.5%, $500,000 bonds payable. The bonds were issued on January 1 to yield 5% annually. Interest is paid semi-annually. A portion of the spreadsheet appears as follows:

	A	B	C	D	E
1		Stated rate:	0.045
2		Effective rate:	0.05
3		Face amount:	500,000
4		Term to maturity in years:	20
5
6	Period	Cash Payment	Interest Expense	Change in Discount	Outstanding Balance
7	0
8	1
9	2

What formula should Ohlson use in cell C8 to calculate interest expense for the first interest payment?

Multiple Choice

• =B8 D8

• =E7*B3

• =E7*B3/2

• =E7*C2/2