On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below: Payment Cash Payment Effective Interest Increase in Outstanding Balance Balance 7,306,018 1 430,000 438,361 8,361 7,314,379 2 430,000 438,863 8,863 7,323,242 430,000 439,395 9,395 7,332,637 4 430,000 439,958 9,958 7,342,595 5 430,000 440,556 10,556 7,353,151 6 430,000 441,189 11,189 7,364,340 38 430,000 502,207 72,207 8,442,327 39 430,000 506,540 76,540 8,518,867 40 430,000 511,133 81,133 8,600,000 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 4. Interest is determined by what approach? 5. What is the stated annual interest rate? 6. What is the effective annual interest rate? 7. What is the total cash interest paid over the term to maturity? 8. What is the total effective interest expense recorded over the term to maturity? Answer is complete but not entirely correct. 1. Face amount $ 8,600,000 2. Initial selling price $ 7,306,018 3. Term to maturity 20 years 4. Interest is determined by what approach? Effective interest rate 5. Stated annual interest rate 10% 6. Effective annual interest rate 7. Total cash interest paid 8. Effective interest expense 12 % $ 17,200,000 $ 406,018