Ripley Co. issued $250,000 of 10 year zero-coupon bonds. After five years, the book value of the bonds was $222,500. Ripley Co. decided that it no longer needed the debt, and consequently, decided to retire the bonds early at a cost of $212,500. What effect does the early retirement have on the company's net income?

A. No effect

B. Gain on early retirement of $10,000

C. Loss on early retirement of $20,000

D. Gain on early retirement of $37,500