On January 1, Year 1, Denver Company Issued Bonds with a Face

On January 1, Year 1, Denver Company issued bonds with a face value of $100,000, a stated rate of interest of 8%, and a 5-year term to maturity. The bonds were sold at 102.5. Denver uses the straight-line method to amortize bond discounts and premiums. What is the amount of interest expense during Year 1?

A) $7,500
B) $8,500
C) $8,000
D) $8,200