On January 1, 2016, Donna Company leased equipment by signing a five-year lease that required five payments of $30,000 due on December 31 of each year. The equipment remains the property of the lessor at the end of the lease, and Donna does not guarantee any residual value. Using a rate of 8%, Donna capitalized the lease on January 1, 2016, in the amount of $119,781. What is the amount of interest expense Donna should report on its 2017 income statement?
A. $9,582
B. $7,949
C. $20,418
D. $22,051
Answer: B
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