Problem: On January 01, 2012 Roberts Inc. issued $2 million face amount of 10-year 10% coupon rate bonds when market interest rates were 11%. The bonds pay interest annually and mature on Dec. 31, 2021. Because the market interest rate was higher than the coupon rate, the bond was issued at a discount and the company only received $1,882,000 in cash.

Required:

Question: Would you please explain to me the calculations needed to find out the annual interest expense? I think that it's more than a simple Amount x Rate divided by year since the bond was issued at a discount? Please show steps how you get an answer and please be clear in your explanation.