On December 31, year 1, Marsh Company entered into a debt restructuring agreement with Saxe Company, which was experiencing financial difficulties. Marsh restructured a $100,000 note receivable as follows:

Reduced the principal obligation to $70,000.

Forgave $12,000 of accrued interest.

Extended the maturity date from December 31, year 1 to December 31, year 3.

Reduced the interest rate from 12% to 8%. Interest is payable annually on December 31, year 2 and year 3.

Present value factors:

Single sum, two years @ 8%	.85734
Single sum, two years @ 12%	.79719
Ordinary annuity, two years @ 8%	1.78326
Ordinary annuity, two years @ 12%	1.69006

In accordance with the agreement, Saxe made payments to Marsh on December 31, year 2 and year 3. Marsh does not elect the fair value option for reporting the modification of debt. How much interest income should Marsh report for the year ended December 31, year 3?

Group of answer choices

$0

$5,600

$8,100

$11,200