On January $1,2006,$ Beulah Grace Benny Co$.$ sold $12\%$ bonds with a face value of $$500,000.$ The bonds mature in five years, and interest is paid semiannually on June $30$ and December $31.$ The bonds were sold for $$538,500$ to yield $10\%.$ Using the effective interest method of amortization, interest expense for $2006$

is:

a$.$ $$53,696.$

b$.$ $$53,850.$

c$.$ $$50,000.$

d$.$ $$60,000.$