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Blossom, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $324152, with the first payment due at lease inception.
Blossom, Inc. leased equipment from Tower Company under a 4-year lease requiring equal annual payments of $324152, with the first payment due at lease inception. The lease does not transfer ownership, nor is there a bargain purchase option. The equipment has a 4-year useful life and no salvage value. Blossom, Inc.'s incremental borrowing rate is 11% and the rate implicit in the lease (which is known by Blossom, Inc.) is 8%. Assuming that this lease is properly classified as a finance lease, what is the amount of interest expense recorded by Blossom, Inc. in the first year of the asset's life? PV Annuity Due PV Ordinary Annuity 3.57710 8%, 4 periods 3.31213 3.44371 3.10245 11%, 4 periods O $35657 O $85891 $0 $66830
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