14. IBM leases equipment to Schleck, Inc. The non-cancelable term is 6 years beginning January 1, 20X1, with equal rental payments of $41,900 at the beginning of each year. Schleck guarantees the $10,000 residual value although they expect the residual value of the equipment to be only $7,500. The lease does not contain a bargain purchase option nor does it transfer title at the end of the lease term. The fair value of the equipment at the inception of the lease is $215,496. The equipment has a useful life of 7 years. The lessee's incremental borrowing rate is 10%, and the lessor's implicit interest rate of 8% is known to the lessee. Interest Expense for scal year 20X1 equals