The following information is used to answer questions.

Bonds: $1,000,000 Par Value

Semiannual Interest Payments,

Three-Year Life

Annual Contract Rate: 6%

Annual Market Rate: 8%

1 What is the price of the bond?

A. 963,544.12

B. 952,877.65

C. 947,578.63

D. 925,587.96

2 What is the amount of the bond discount?

A. 52,421.37

B. 50,865.35

C. 47,822.45

D. 45,647.24

3 What is the semi-annual cash payment to the bondholder?

A. 25,000

B. 30,000

C. 35,000

D. 40,000

4 What is the interest expense for the second semi-annual payment under the effective interest method?

A. 37,903.15

B. 38,219.27

C. 38,548.04

D. 38,889.96