Exhibit 21-2 on January 1, 2010, Maury Company Leased Equipment

Multiple Choice

Exhibit 21-2 On January 1, 2010, Maury Company leased equipment, signing a five-year lease that requires annual lease payments of $20, 000.The lease qualifies as a capital lease.The payments are made at year-end, and the first payment will be made at December 31, 2010.In addition, Maury guarantees the residual value to be $10, 000 at the end of the lease term.Maury correctly uses the lessor's implicit interest rate, which is 12%.The present value factors for five periods at 12% are as follows:
$\begin{array}{llr} \text {Present value of \( \$ 1 \) } &0.567427\\ \text { Present value of ordinary annuity of \( \$ 1 \) } &3.604776\\\end{array}$

- Refer to Exhibit 21-2.What is the correct interest expense for the year ending December 31, 2011, for the lease obligation? (Round answers to the nearest dollar.)

A) $20, 000
B) $11, 948
C) $ 8, 052
D) $ 7, 290