Difficulty in question 99 pg 30 BBP kit

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 vears. 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? $514,560 $566,000 $564,560 $520,800 this question is not clear in my head, there is a similar question worked in the lecture in example 1 amortised cost but here the terms used are different. what does the "principal amount" and "fixed interest" means?