Hank Waters loaned $112,695 to Ryan Phelps on April 1, 20X1. A zero-interest- bearing note (face amount, $150,000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on April 1, 20X4. The prevailing rate of interest for a loan of this type is 10%. The present value of $150,000 at 10% for three years is $112,695. What amount of interest income should Hank Waters recognize in 20X1