On January 1, 2012, Duke Company negotiated an agreement to modify the terms of a $500,000 note with $38,000 of accrued interest. Payments of $25,000 cash will be made each quarter end up to and including June 30, 2016. Which of the following is true about this troubled debt restructuring?

a.		The $25,000 payments will include principal and interest.
b.		A gain of $88,000 will be recognized.
c.		The present value of the payments must be calculated to determine if there is a gain or loss.
d.		None of the above is true.