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How much is the interest expense for the year ended

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Question - On September 30, 2020, EYE Company issued 5,000,000 face value, 5-year bonds at 102. Each 1,000 bond was issued with 20 detachable share warrants, each of which entitled the bondholder to purchase one share of 5 par ordinary share at 25. At the time of issuance, there was no available market value for the warrant. The stated interest rate on the bonds is 11% payable annually every September 30. However, the prevailing market rate of interest for similar bonds without warrants is 12%. The present value of 1 at 12% for 5 periods is 0.57 and the present value of an ordinary annuity of 1 at 12% for 5 periods is 3.60. EYE Company's accounting year ends on December 31. How much is the interest expense for the year ended December 31, 2020?

Reference no: EM132973482

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