Besta Energy Co. decided to launch a new drilling project. On January 1, the company paid $50,000 to acquire an unproved property. During the year, the company paid $250,000 to drill an exploratory well. The company had an 8%, $500,000 note outstanding during the entire year. What amount of interest expense related to this project should Besta Energy Co. report in its income statement?

$40,000.

$14,000.

$12,000.

$0.