On January 1, Year 1, Sheep Inc. issued a five-year note payable for $200,000 and received $190,000 in cash. The note bears interest at 6%, which is paid annually on December 31. Directly related legal costs of $5,000 were also paid with respect to the note payable. The effective interest rate related to this note is 7.872%. Sheep classified the note as an other financial liability. The company has a May 31 year end and reports under IFRS. What amount of interest expense related to this financial liability will Sheep recognize for fiscal year 1?

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