Instructions: Use the present value and future value tables included in Appendix 8 and on the textbook companion website. On January 1, Cromwell Corp. leased a mainframe computer from Fairview Company for $42,000 per year (payable on each December 31) for 10 years. The lease is a capital lease, and the current market rate of interest is 12 percent. The market value of the computer is $237,300, which is equal to its discounted present value at 12 percent. Given this data, interest expense on the lease for the first year is
A) $42,000
B) $28,476
C) $25,200
D) $13,524