debt instrument

On 1 January 20X1 Penfold Co purchased a debt instrument at its fair value of $500,000. It had a principal
amount of $550,000 and was due to mature in five years. The debt instrument carries fixed interest of 6%
paid annually in arrears and has an effective interest rate of 8%. It is held at amortised cost.
At what amount will the debt instrument be shown in the statement of financial position of Penfold Co as at
31 December 20X2?
the answer is
1 January 20X1 500,000
Interest 8% 40,000
Interest received (550,000 × 6%) (33,000)
31 December 20X1 507,000
Interest 8% 40,560
Interest received (33,000)
31 December 20X2 514,560

i didn’t quite understand the answer , the debt instrument under amortised cost is FV plus transaction cost that mean
550 + (550*0.08)-( 500*0.06)
so why they use 500 which is only FV ??