Rae Company Purchased a New Vehicle by Paying $10,000 Cash

Multiple Choice

Rae Company purchased a new vehicle by paying $10,000 cash on the purchase date and agreeing to pay $3,000 every three months during the next five years. The first payment is due three months after the purchase date. Rae's incremental borrowing rate is 12%. The vehicle reported on the balance sheet as of the purchase date is closest to:

A) $44,633.
B) $50,000.
C) $54,633.
D) $60,000.