How much interest expense will the corp recognize over life

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Leases

Question 1: The Corp has signed a 5-year lease for new production equipment. The lease calls for annual payments at the start of each year, beginning on the date of the signing as the first payment, of $74,000. The useful life of the machine is 6 years and The Corp will retain title at the end of the lease. The lessor structures leases with an implicit interest rate of 10%. There is no residual value at the end of the lease. How much interest expense will The Corp recognize over the life of the lease?

Option A $ 37,000

Option B $ 185,000

Option C $ 61,430

Option D $ 153,500

Option E $ 44,400

Reference no: EM132518094

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