Hatfield Corporation Leases a Tractor from Star Leasing with a Five-Year

Hatfield Corporation leases a tractor from Star Leasing with a five-year non-cancelable lease on January 1, 2014 under the following terms:
1. Five payments of $26,379.74 (a 9% implicit rate) due at the end each year.
2. The fair value of the tractor is $100,000.
3. The lease is nonrenewable and the tractor reverts to Star at the end of the lease term.
4. The tractor has a six-year economic life.
5. Hatfield has an excellent credit rating.
6. Star offers no warranty on the tractor other than the manufacturer's two-year warranty that is handled directly with the manufacturer.
-If Hatfield's incremental borrowing rate is 11% and the implicit rate is not known to the lessee,what interest rate will Hatfield use to account for this lease?

A) 9%
B) 10%
C) 11%
D) Cannot be determined from information given.