Calculate the amount of interest expense

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On January 1, 2004, Digital, Inc. leased heavy machinery from Young Leasing Company. The terms of the lease require semi-annual payments of $20,000 every six months for ten years beginning on June 30, 2004. The annual interest rate on the lease is 20%, compounded semi-annually. Assume the lease qualifies as a capital lease.

Calculate the amount of interest expense reported on Digital's 2004 income statement related to this lease. Enter your answer with two places after the decimal point (i.e., $12,345.67).

Reference no: EM13123925

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