Johnson, Inc., leased an asset to Raymond Corporation. The cost of the asset to Johnson was $8,000. Terms of the lease specify four-year life for the lease, an annual interest rate of 15 percent, and four year-end rental payments. The lease qualifies as a capital lease and is classified as a direct-financing lease. The asset reverts to Johnson after the fourth year, when its residual value is estimated to be $1,000. The amount of each rental payment is
A) $2,000.
B) $2,335.
C) $2,501.
D) $2,602.

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The Answer of Johnson, Inc., leased an asset to Raymond Corporation. The cost of the asset to Johnson was $8,000. Terms of the lease specify four-year life for the lease, an annual interest rate of 15 percent, and four year-end rental payments. The lease qualifies as a capital lease and is classified as a direct-financing lease. The asset reverts to Johnson after the fourth year, when its residual value is estimated to be $1,000. The amount of each rental payment is
A) $2,000.
B) $2,335.
C) $2,501.
D) $2,602.