Daniels Company entered into a direct-financing lease with Old 7 Corporation, which called for seven annual rentals of $3,500 at an interest rate of 1 . percent. The payments are to be paid at the end of each year. The lease also contained a bargain purchase option allowing Old 7 to purchase the asset for $2,500 after making the seventh annual rental payment. What was the cost of the asset?
a. $17,104
b. $18,473
c. $25,631
d. $27,000
A
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