A company has $1,000,000 in 2.8% fixed rate debt, with interest due on December 31 of each year. On January 1 it swaps its fwxed interest payments for variable payments at the Treasury bill rate plus 0.7%. The current Treasury bill rate is 1.9%. The swap qualifies as a fair value hedge of the fixed payments. The company's accounting year ends December 31 , and all income effects of the loan and the swap are reported in interest expense. On December 31 , the Treasury bill rate has increased to 2.2%, increasing the varlable payments on the swap for the following vear. The swap value and the loan value each change by $80,000. The company reports interest expense of: a. 525.000 b. 530,000 C. 528.000 d. 5.26.000