Russell Co. Co. issued $40,000 of 7-year, zero-coupon notes on January 1 when the market yield was 4%. The bond agreement stated that compounding was semiannual. The issue price of the notes was $30,315. How much interest will Russell Co. Co. report on its income statement during the first year?

		$1,213
		$1,224
		$1,200
		$1,237