Andrews Inc. issues a $497,000, 10%, 3-year mortgage note on January 1. The note will be paid in three annual installments of $200,000, each payable at the end of the year. What is the amount of interest expense that should be recognized by Andrews Inc. in the second year?

(a) $16,567.

(b) $49,700.

(c) $34,670.

(d) $346,700.