17. On January 1 of Year 1, Drum Line Airways issued s3,500,000 of par value bonds for $3,200,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 7% while the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $10,000 every six months. The amount of interest expense recognized by Drum Line Airways on the bond issue in Year 1 would be