Answer:
The answer is: $450,000
Step-by-step explanation:
The effective interest method is used for bonds sold at a discount. The amount of the bond discount is amortized to interest expense over the bond's life.
Total annual interest: $800,000 ($10 million x 8%)
Bond discount: $1 million amortized in 10 years, $100,000 per year (the discount is the difference between bond's par value and selling value $10M - $9M = $1M)
Total annual interest = $8,000,000 + $100,000 = $900,000
interest expense for 6 months = $900,000 / 2 = $450,000