226. Stable Company issued $500,000 of 6%, 5-year bonds at 98, with interest paid annually. Assuming straight-line amortization, what is the total interest cost of the bonds?

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The total interest cost includes the annual interest payments plus the discount on the bonds. The annual interest payment is $500,000 * 6% = $30,000. Over 5 years, this totals $150,000. The bonds were issued at 98, so the discount is $500,000 * 2% = $10,000. The total interest cost is $150,000 + $10,000 = $160,000.