Titanic Corporation Leased Executive Limos Under Terms of $20,000 Down

Multiple Choice

Titanic Corporation leased executive limos under terms of $20,000 down and four equal annual payments of $30,000 on the anniversary date of the lease. The interest rate implicit in the lease is 11%. The first year's interest expense would be:

A) $13,200.
B) $10,238.
C) $33,200.
D) $15,543.PVA = $30,000 x 3.10245* = $93,074 $93,074 x 11% = $10,238
*PVA of $1: n=4; i=11%