On January 1, 2011, an investor paid $299,000 for bonds with a face amount of $350,000. The stated rate of interest is 10% while the current market rate of interest is 12%. Using the effective interest method, how much interest income is recognized by the investor in 2011 (assume annual interest payments and amortization)?
a) $29,900.
b) $35,000.
c) $35,880.
d) $42,000.