On January 2, 2018, Tylor Company issued a 4-year, $550,000 note at 6% fixed interest, interest payable semiannually. Tylor now wants to change the note to a variable rate note. As a result, on January 2, 2018, Tylor Company enters into an interest rate swap where it agrees to receive 6% fixed and pay LIBOR of 5.6% for the first 6 months on $550,000. At each 6-month period, the variable interest rate will be reset. The variable rate is reset to 6.7% on June 30, 2018.

Compute the net interest expense to be reported for this note and related swap transaction as of June 30, 2018.

Net interest expense