The Brown Company received a 2-year, $190,000 note on January 1, Year 1, in exchange for property it sold to Gray Company. According to the terms of the note, interest of 5% is payable annually on January 1, Year 2, and January 1, Year 3, when the face amount is also due. There was no established exchange price for the property. The prevailing rate of interest for a note of this type was 12% at the beginning of Year 1 and 14% at the beginning of Year 2. What interest rates should be used to calculate the amount of interest revenue from this transaction for the years ended December 31, Year 1 and Year 2, respectively?

• A.0% and 5%.

• B.12% and 14%.

• C.5% and 5%.

• D.12% and 12%.